After the Bell: Choppy End to Strong Weekly Grain, Soybean Price Gains Ahead of the Holiday Weekend

Posted on Fri, 01/15/2021 - 14:22

Markets and government offices closed on Jan. 18 in observance of the Martin Luther King Jr. holiday. No Pro Farmer reports until Tuesday, Jan. 19.

Corn :  March corn fell 2 3/4 cents to $5.31 1/2, paring a weekly gain of 35 1/4 cents. December corn rose 2 ¼ cents on Friday to $4.60, extending the weekly advance to 19 1/2 cents.  Profit taking allowed nearby corn futures to pare strong weekly gains into the three-day holiday weekend. Gulf export prices remained strong. New-crop futures remained supported by the upcoming intense battle for U.S. acres. The export market is quiet with high prices curtailing interest. There were rumors that Argentina is considering a 3% increase on corn export taxes to 15%.  Meanwhile, the Brazilian Cepea Index of domestic corn prices hit a record this week and that will be a big incentive for growers to plant as many safrinha acres as possible. Rains this week and more next week are great for soybeans but more will be needed for the second crop.  Meanwhile in Russia, the government approved an export tax on corn at 25 euros per MT starting March 1, limiting supplies for the world market.  Corn prices in China closed the week at a record $11.20.  

Soybeans: March soybean futures closed the day down 13 3/4 cents at $14.16 3/4 but for the week gained 42 cents. March soybean meal futures finished Friday down $1.70 at $463.20, paring the weekly gain to $23.60. March bean oil fell 176 points this week to close at 41.85 cents. Friday’s price weakness is not likely to deter the powerful bulls as they continue to enjoy a strong price uptrend on the charts, with no early technical clues that a market top is close at hand. Look for more price strength next week, but with likely higher volatility on both the upside and downside. Today’s NOPA soybean crush of 183.2 million bushels was a bit lower than expected. Still, It projects the crush for the first four months of the crop year at 753.2 million bushels and up from 708.9 million last year. Weather in South American soybean regions will continue to be in focus in the coming weeks. Right now, the weather leans negative.  

Wheat: March soft red winter wheat futures rose 5 1/2 cents to close at $6.75 1/2, hitting a contract high and the highest level since 2014. For the week, March SRW gained 36 3/4 cents. March hard red winter wheat futures also hit a contract and six-year high and closed the week up 48 ¼ cents to $6.43. Spring wheat futures extended this week’s gain to 35 1/2 cents to close at $6.43 1/4. Today’s lower-range closes after hitting new swing highs or contract highs in winter wheat futures suggests the bulls may be ready for a pause early next week. However, the bulls have the solid technical advantage amid price uptrends firmly in place, and bullish fundamental news is still fresh. Russia has announced it will place a 50-euro per MT ($1.65 per bu.) duty on its wheat exports beginning March 1 through June 30.  That’s double the present duty. The aggressive duty is a de facto Russian wheat export ban and other primary exporters including the U.S. will fill world demand

Cotton: Cotton futures consolidated to close the week, with futures settling 18 to 45 points lower for the day but higher for the week. The front-month settled 93 points higher for the week and above the 80.00-cent level. USDA made another dramatic cut to its U.S. cotton production estimate this month, but reaction to the cut was restrained, as the market had been anticipating such cuts for months and USDA was playing catch up. USDA also raised its cotton export forecast for 2020-21. The unusual combination of rising exports and shrinking supplies should keep the U.S. cotton market well supported. The U.S. banned cotton from China’s Xinjiang region over allegation of forced labor this week. And other countries have also moved to restrict cotton imports from the region.  

Hogs:  Strong finish to a mixed week of trade. April hogs rose 57.5 cents to close at $72.65 on Friday, paring the weekly decline to 17.5 cents. June hogs rose a nickel to $84.375, capping a 62.5-cent gain for the week after setting a new contract high at $85.425. Recovering fresh pork prices after a midweek slump helped to support the rebound in hog futures to close the week. Pork cutout values at midday Friday rose $2.08 at $64.84. That’s up $1.79 from a week ago and $6.14 higher than a year ago. Sales this week were moderately active and will need to stay that way with supplies of market-ready hogs. Packer margins are estimated at $42.75, up from $37.95 a week ago. Cash hogs were steady Friday but down for the week. Big hog supplies coming to market and heavy slaughter weights that continue to add at least 2% more pork to weekly totals are also near-term negatives for futures and cash markets. Deferred lean hog futures moved to new contract highs this week after corn prices surged to 7 1/2-year highs, increasing speculation farrowing will be reduced in 2021 and producers sell hogs at lighter market weights.

Cattle: Live cattle finished 45 cents to $1.325 higher through the December contract today. Feeder cattle posted gains of $1.70 to $2.45 through the October contract. But for the week, April live cattle dropped $1.10, while March feeders fell $1. Feeder cattle futures remain highly responsive to price movements in the corn market and that’s likely to remain traders’ focal point coming out of the extended holiday weekend. If the strong uptrend in corn futures continues, it will not only be difficult for feeders to build on today’s corrective gains but fresh selling would be likely. Focus in live cattle futures next week will be on the cash and product markets as traders watch to see if prices start to improve seasonally. But if feeder cattle face heavy pressure from any additional strength in corn, it would weigh on the fat market.