News & Media

Market Briefs for October 24, 2019

Cotton futures have been on a rollercoaster ride over the past few weeks. Preliminary news that the U.S. and China had reached a partial trade deal sent the market to a new three month high before the reality of the actual deal resulted in the market giving back most of those gains. While the U.S. announced China would buy $40-50 billion in agriculture goods under the agreement, China has stated they will buy based upon market-based principles.  Net exports were strong at 206,500 metric tons last week, but China was not a buyer. The crop is now 40% harvested, compared with a 5-year average of 35%.  Concerns about the condition of the crop in West Texas have been supportive for prices, as 30% of the crop there is rated poor to very poor.  December charted a bearish outside day on Monday, and is struggling to overcome the negative chart signal. The overall trend is still higher, but December needs to be able to close above 65.48 cents to suggest further gains are possible.

Rice futures are currently testing technical support as harvest winds down. USDA says farmers have 93% of the crop in the bins. Arkansas is projected by USDA to harvest an average of 7,500 pounds per acre on 1.126 million acres, but many in the trade feel that yield estimate is too high. Regardless, at this point, the smaller crop is already built in to prices. Exports have been somewhat disappointing, with last week’s shipments down 50% from the four-week average. A close below support at $11.62 for November and $11.92 for January would leave the market vulnerable to additional technical selling.

Corn harvest is finally ramping up across the country, and USDA says that 30% of the crop is now in the bins. That is still well behind the 5-year average pace of 47%. We still don’t know the full extent of the damage of the early freeze across the corn belt and snowstorm in the Dakotas. Demand is a negative factor for prices, with export sales down 49.4% from last year, and shipments down 63%. Ethanol production has increased in recent weeks, but it doesn’t matter much because production remains significantly below year-ago levels. USDA currently says 19/20 carryout will be 1.929 billion bushels, and the average on-farm price will be $3.80. December futures have major resistance at $4, with support starting at $3.80.

Soybean futures are chopping along mostly sideways, with the topside limited by resistance at the June high, which is $9.45 for November and $9.59 for January. USDA says the U.S. is going to produce 3.55 billion bushels on a national average yield of 46.9 bushels per acre. However, the early freeze across the corn belt and the snowstorm in the Dakotas had to have significantly impacted yields there, and the full extent of the damage is not yet known. Weekly export sales were dismal this week, coming in at just 17.5 million bushels, that’s down from 58.8 million bushels last week. Total export sales are down 11.9% from the year-ago total.

Live cattle futures continue their ascent, rallying back over $16 in recent weeks after bottoming out in reaction to a beef plant fire in August. December futures charted a bullish outside day on Wednesday, closing above previous resistance at the June high in the process. Boxed beef prices were also up sharply Wednesday, providing support for the rally. November feeders also charted a bullish outside day Wednesday, but will have resistance at the recent high of $146.82.

Lean hog futures have been in a volatile trading pattern in recent weeks. Record-large hog supplies are keeping futures under pressure. Cash hog and wholesale pork prices also remain under pressure from burdensome hog supplies on the market. Export demand remains strong, though, and is providing underlying support for prices. December hogs have support starting at $63.

Total U.S. milk production was raised in the October report thanks to a larger dairy herd. 2019 production is now pegged at 218.2 billion pounds, while 2020 production is pegged at 221.6 billion. Price estimates were also increased slightly, with 2019 Class III now estimated at $16.55/cwt and 2020 Class III estimated at $17.20/cwt.