After the Bell: Bull Run Continues for Soybeans, But Know Prices Could Turn Back Quicly

Posted on Fri, 09/18/2020 - 14:42

Corn: December corn futures closed the day up 3 1/4 cents, hit a six-month high and closed at a technically bullish weekly high close. For the week, December corn gained 10 cents. Look for followthrough technical buying on Monday after this week’s strong close. Focus will continue to be on export demand — namely from China. Corn traders expect more strong U.S. export sales to China amid reports of depleted stockpiles, high domestic prices and weather-related crop losses. With that said, corn traders will continue to look to soybean futures for price direction as those prices hit contract highs this week and are trending sharply higher. Early harvest results and yields off the combine will also come more into play next week.

Soybeans: Soybean futures finished with gains in the teens in most contracts today, with the November contract up 16 cents to $10.43 1/2. December soymeal firmed $6.80 today, finishing at $342.10. December soyoil gained 28 points today to 35.14 cents. For the week, November soybeans surged 47 1/2 cents. Bulls have huge momentum heading into next week, with bullish technicals and strong fundamentals backing the market. Front-month soybean futures have surged to their highest level on the weekly continuation chart since the beginning of June 2018 amid massive Chinese demand for U.S. soybeans. China has made daily purchases of U.S. soybeans for the past 11 trading sessions. There’s no reason to believe the bull run will end next week, but we must point out that the market is heavily overbought and funds hold an aggressive net long position, both of which could trigger a corrective pullback without notice.

Wheat: Winter wheat contracts finished 16 to nearly 19 cents higher in most contracts today. Spring wheat futures posted 9 to 10 cent gains in most contracts. For the week, December SRW and December HRW futures each surged 33 cents, while December HRS futures firmed 19 cents. Wheat futures hadn’t shown any leadership until today’s session when traders reacted to dryness in Argentina, parts of Europe and the Black Sea region. While this could continue to fuel buying next week, the world is flush with supplies, with global ending stocks projected to be record-large in 2020-21. The bigger source of buying could come from fund buying. With funds holding a huge net long position in the soybean market and also aggressively long corn, wheat might be the benefactor if funds decide to actively continue their buying spree because there’s still “room” for them to add to length in the wheat markets.

Cotton: December cotton futures closed the day down 19 points at 65.66 cents and for the week gained 91 1/2 points. Prices did finish at a technically bearish weekly low close today. Overall, the cotton futures market continues to grind higher in uneventful fashion. Chart history suggests the same can continue in the coming weeks. However, cotton traders and producers should be at least a bit worried the futures market could not produce price gains late this week following Thursday morning’s big USDA export sales tally.

Hogs: Lean hog futures finished narrowly mixed today. For the week, December lean hog futures dropped $1.105. The cash hog market is rising, but traders will watch prices closely next week as slaughter will ramp up seasonally the final quarter of the year. December hogs are currently trading below the cash market, but don’t reflect normal seasonal pressure. If the cash market starts weakening, a downturn in futures is likely to follow. Next Thursday’s Hogs & Pigs Report is a wildcard as there’s probably as much uncertainty going into this report due to Covid’s effects on the industry as any since impacts from the PEDV outbreak.

Cattle: December live cattle futures closed the day up 52 ½ cents at $111.85 and near midrange. For the week December live cattle gained $1.95. November feeder cattle futures on Friday closed up 32 ½ cents at $142.525 and for the week rose $1.20. With live cattle futures prices Friday closing near the weekly high, look for some follow-through buying interest on Monday. Boxed beef prices could be nearing value levels. Today’s midday beef report showed Choice values up 57 cents and Select gaining 60 cents, on lighter movement of 74 loads.