After the Bell | August 25, 2023

After the Bell
After the Bell
(Pro Farmer)

Corn: Corn futures saw some slight volatility ahead of the Crop Tour results which came after the close, with December futures ultimately closing 1/4 cent lower at $4.88 marking a 5-cent loss on the week. Price remains stuck between moving average support and resistance, price will likely break one way or the other on Monday. Wheat futures did little to help corn bulls today with a midday selloff in wheat taking this morning’s momentum out of bulls’ sails. Price stabilized mid-morning in both corn and wheat, but the damage was done, and corn traded near breakeven for much of the latter half of the session. The Midwest is forecast to experience mostly dry weather over the next ten days except in norther and easternmost parts of the region, which are expected to see infrequent showers, World Weather Inc says. The recent heat wave is starting to abate from the central U.S. and much cooler conditions are expected into the weekend, but the heat has already likely caused early maturation of corn, having impacted grain fill and ultimately lowering yield and crop quality.

On Day 4 of the Pro Farmer Crop Tour, scouts found an average yield of 182.80 bu. per acre, compared to 183.81 bu. last year and the three-year average of 184.13 bu. per acre. In Minnesota, scouts found an average yield of 181.34 bu. per acre vs. 190.39 bu. in 2022 and the three-year average of 187.63 bu. per acre. Tour results can be found here.

Soybeans: November soybeans rallied 16 cents to $13.87 3/4 and gained 34 1/2 cents on the week, while September meal futures rose 10 cents to $422.80, a $18.90 increase week-over-week. September soyoil rose 119 points to 66.73 cents but faded 156 points on the week. Soybean futures found a bid for the third straight session, led higher by strength in meal and soyoil despite persisting gains in the U.S. dollar. Harrowing weather conditions across the Midwest in the form of excruciating heat paired with dry weather have recently heightened market fears of potential production curbs in an already snug supply scenario. Traders have been tuned in to the Pro Farmer Crop Tour this week to gain a firsthand look at crop conditions across the Midwest in the wake of seemingly countless weather hiccups that have occurred across the Midwest throughout the growing season.

On Day 4 of the Tour, Iowa results showed scouts found an average pod counts in a 3’x3’ square of 1,190.41 bu., slightly above last year’s average of 1,174.43 and the three-year average of 1,179.51. In Minnesota, scouts found an average pod count of 984.39, down from last year’s average of 1,100.75 and the three-year average of 1,071.31. Weather will continue to prove important as the month of August nears an end and harvest efforts commence in September.

 

Wheat: December SRW wheat futures closed down 10 cents at $6.21 3/4 , nearer the session low and closing at a technically bearish weekly low close. For the week, December SRW lost 17 1/4 cents. December HRW wheat rose 2 cents to $7.64 1/2 and near mid-range. For the week December HRW rose 3 3/4 cents. December spring wheat futures rose 2 3/4 cents on the session to $8.02, marking a 15 3/4 cent loss on the week. Buying interest in the U.S. wheat futures markets was limited today by a push in the U.S. dollar index to a 5.5-month high. Wheat traders seemingly have brushed aside recent Russian attacks on Ukraine grain facilities, reckoning most of the Ukraine grain can reach export destinations via other routes than the dangerous Black Sea. Reports say Russian President Vladimir Putin will hold talks with Turkey’s President Tayyip Erdogan soon, in an effort to persuade Moscow to return to the Black Sea grain-shipping deal. World Weather Inc. today said in the northern Plains, limited rainfall in the next seven days will be great for harvesting, but will lead to some more stress in immature, late-season crops. Crop stress could rise some more in the second week of the outlook due to unusual heat and more limited rainfall, said the forecaster. Look for the wheat futures markets to continue to look to corn and soybean markets for direction next week.

Cotton: Cotton futures continued this week’s rally, rising 122 points before settling at 87.31 cents, marking a 3.69-cent rise on the week.  Outside markets proved volatile today on the heels of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, sending the U.S. dollar index notably higher with rising expectations of another rate hike and interest rate futures suggesting delaying the expected rate cut to July next year from June previously. Cotton futures managed that volatility well and trended higher throughout the session. Crude oil futures saw volatility as well, giving up overnight gains to close lower on the day. The expectation of a badly damaged crop reducing production has cotton bulls aiming to break above double-top resistance at 87.80 cents. Crop conditions are likely to fall once again Monday as cotton production areas have seen very little to zero rainfall this week. This could give bulls the needed momentum to break through the prior highs, though that resistance is formidable. Bears may defend the level until the next crop production report is out in September, which will likely include the reduction in acres that we expect due to the August FSA data.

 

Cattle: Expiring August live cattle futures ended Friday having risen 82.5 cents to $180.675, while most-active October futures added 45 cents to $181.175, marking a $3.05 gain on the week. August feeder futures jumped $1.125 to $274.625, while the October contract gained 72.5 cents to $253.975, which marked a $3.275 gain on the week. The cash cattle markets firmed in light trading as this week passed, with the five-market average for the Monday-Thursday period reaching $185.33, up 29 cents from last week’s full-week mean. But, whereas last Friday’s futures breakdown caused many producers to take less for their animals that day, thereby dragging the weekly price lower, yesterday’s strong advance, along with today’s follow-through, probably means packers will have to pay up for any animals they buy today. The heat that dominated the Plains states from Texas through Nebraska likely generated a great deal of heat-stress on feedlot cattle and may have caused many to lose weight this week. That implies market-ready supplies will remain tight next week. And with wholesale beef prices having rebounded significantly this week, packers will have few excuses for trying to lower bids. The latest reading for steer dressed weights rose seasonally to 901 pounds/head during the second week of August. And while that topped the five-year average by eight pounds, it matched last-year’s comparatively low figure. When combined with the choice-select beef price spread over $25.00, these imply the supply of market-ready animals remained tight before the heat wave hit. This week’s late futures market action pushed nearby futures above recent resistance, suggesting short-term technical strength as well.

Hogs: October lean hog futures fell 65 cents to $79.825, nearer the daily low and on the week down $2.30. Futures prices were pressured today as the seasonal slide in the cash hog index is accelerating. The CME confirmed Wednesday’s index had fallen 97 cents to $96.40 and today’s preliminary figure for Thursday tumbled another $1.22 to $95.18. The national direct five-day rolling average cash hog quote today is $88.11. Today’s futures action also likely reflected Thursday’s $4.00+ jump in pork cutout, whereas today’s midsession futures reversal likely came in reaction to the noon pork report that showed the cutout value had plunged $10.55 to $94.37, led by a whopping $53.78 drop in bellies. Summertime BLT season is winding down and slaughter levels rising seasonally. Movement at midday was decent at 213.82 loads. Thursday’s weekly USDA export sales report showed U.S. pork sales of 33,000 MT for 2023 were up 15 percent from the previous week and 40 percent from the prior 4-week average. Shipments of 25,200 MT were down 12 percent from the previous week and 5 percent from the prior 4-week average.  These weekly export numbers will have to improve in the coming weeks/months in order for the cash and futures markets to sustain price uptrends. The rise in the U.S. dollar index to a 5.5-month high today only makes U.S. pork less competitive on the world trade markets.

 

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