After the Bell: Corn, Wheat Gain on Crop Concerns, Beans Down on Trade Jitters

Posted on 06/21/2018 2:59 PM

Corn:  Futures favored the upside for most of the day and the market settled high-range and up 2 1/4 to 2 3/4 cents.  Flooding in some areas of the Midwest helped to lift the corn market, as did some spillover from the wheat market. Ideas the Environmental Protection Agency could make some changes to make up for waived biofuel blending obligations when it announces its proposed Renewable Fuel Standard targets for 2019 (2020 for biodiesel) also gave the market a lift, though just what form that might take and when that announcement will occur is still up in the air. On the other hand, old-crop corn export sales fell well short of expectations the week ending June 14 at just 165,900 MT. While gains the past two days were encouraging, much more improvement is needed to erase the chart damage of the past week.

Soybeans: Futures close lower and near session lows despite strength in neighboring grain pits. Most contracts ended down 9 cents. The bean market continues to be unsettled by the hardline stance of the Trump Administration on U.S.-China trade. Soybean inventories at Chinese ports reached a record this month, a sign that crushers bought ahead of increased trade tariff threats. Export sales were at the low end of what trade estimated with 301,700 sold for delivery by Aug. 31 and 227,600 sold for delivery in the next marketing year. Several sales were switched from unknown destinations and one to China to other origins last week, further raising concerns China will remain out of the U.S. market until there a deal is completed. Soybean crush margin based on July futures are back above $1.70 a bushel. Forward margins out the next year are all over $1.30 a bu., a sign that U.S. processor demand for beans will continue to be strong.

Wheat: SRW wheat futures settled high-range and up 5 1/2 to 7 cents. HRW wheat posted gains of 2 3/4 to 4 1/2 cents, which were also good for high-range closes. Spring wheat futures settled low-range but still in positive territory, with most contracts up 1 1/2 cents. News the French Consultancy Agritel is now calling for a 21.5% year-over-year decline in Russia’s wheat crop lifted the market today, as it adds to ideas Russia will be less dominant on the global export market in 2018-19. China’s wheat crop could also drop as much as 20% this year, possibly increasing its import needs, according to traders and analysts cited by Reuters. Also of note, Argentina’s ag ministry trimmed its wheat acreage projection today. Again, all of these factors could imply better demand ahead for U.S. wheat.

Cotton: Prices closed narrowly mixed today—steady in the July contract and up 11 points in December. All contracts finished near mid-range. Some short covering and perceived bargain hunting were featured in cotton futures today. However, gains were limited by the ongoing specter of a U.S. trade war with China and other countries. Weekly USDA export sales saw a net reduction of 112,400 running bales (RB) for the current marketing year, which was disappointing to traders. For the new marketing year, sales of 295,400 RB were reported. Shipments in the latest reporting week were 312,800 RB, which is down 31% from the four-week average.

Hogs: Futures ended mixed but near their daily highs today, with August futures up 75 cents, October up 72 1/2 cents and December hogs unchanged on the day. The market tried to stabilize today amid some short covering following the sharp losses suffered on Wednesday. Trade worries continue to limit buying interest, as the U.S.-China trade stare-down continues with neither side yet blinking. Pork products are on the front line for China trade tariffs on U.S. imports. USDA reported the average cash hog price fetched today was $82.08, down 47 cents from Wednesday's average. The CME Lean Hog Index for June 20 was projected at $85.79 today, which is up 65 cents from the previous day.

Cattle: August live cattle retreated today after failing to hold all the gains yesterday when prices touched the highest in nearly three months. October through February settled down 5 cents to 27 1/2 cents and close in the upper half of the daily range. August through November feeder cattle futures ended down 27 1/2 to 70 cents. Limited cash trade again with futures traders waiting for signals with early-week sales about steady. After yesterday’s rally, the market does not want to get ahead of the cash trade, which has been holding up better than some suspected. Midday wholesale beef was mixed with Choice carcasses marked lower and Select beef up. Overall, beef demand remains good, with middle meats outperforming the rest of the carcass.  Big supplies the next six weeks will test the strength of demand. We will get a better view on supplies on Friday’s monthly Cattle on Feed and freezer stocks reports.

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