After the Bell: Corn, Beans Drift Lower Despite China Purchases; Wheat Gains

Posted on Tue, 09/22/2020 - 14:27

Corn: December corn futures closed the day down 1/2 cent at $3.69 1/4 and nearer the session low. Given the solid losses in corn Monday and the drubbing most of the raw commodity sector took to start the trading week, today’s price action in the corn market should not be disappointing to the bulls. Corn futures were supported on more Chinese sales announcements this morning. USDA’s daily export sales reporting service announced private exporters sold 140,000 MT of corn for delivery to China during the 2020-21 marketing year and another 320,000 MT of corn for delivery to unknown destinations for 2020-21. The primary issue now becomes determining whether China’s recent buying spree reflects the beginning of a structural change in Chinese supply and demand that will continue to grow or just an effort to meet commitments under the Phase 1 trade deal.

Soybeans: November soybeans closed down 2 3/4 cents at $10.19 3/4 today and near the session low. December meal futures hit a 15-month high today and closed up $2.90 at $341.00. December bean oil lost 60 points to close at 33.60 and near the daily low. Prices jumped to session highs early this morning after the reopening following new sales announcements to China today. USDA announced private exporters sold 266,000 MT of soybeans for delivery to China during the 2020-21 marketing year and 264,000 MT of soybeans to unknown destinations for 2020-21. The main issue now becomes determining whether China’s recent buying spree is nearing an end. The soybean market rally today was capped by open harvest weather and  a stronger U.S. dollar index that hit a six-week high today.

Wheat: Prices rebounded from overnight declines but still closed midrange. December SRW rose 3 1/4 cents to $5.58 and December HRW wheat was up 4 1/2 cents to $4.91 3/4. Spring wheat gained about 6 cents. Futures rebounded with European prices as Russian wheat prices continue to climb. Egypt tendered for wheat today and bought 405,000 MT of Russian wheat for November delivery. Covid-19 has encouraged many state buyers to increase their held stocks of food grains in case there is a problem in supply logistics and the Northern Hemisphere harvest for next year’s crop may be smaller, should the dryness in Europe and the Black Sea continue. Meanwhile, Canada called off free trade talks with China after four years of negotiations.

Cotton: Futures were confined to Monday’s range and closed in the middle of today’s action. December cotton rose 30 points to 65.54 cents. Futures gained for the first time in six sessions as bargain buyers returned with a firmer U.S. stock market. However, the dollar index rose to a six-week high, limiting advances and making U.S. cotton costlier to overseas buyers. Prices also rose as tropical depression Beta moved inland along the Texas coast south of Houston, unleashing heavy rains and some flooding.  Prices touched the highest since late February last week on concerns about crop damage from Hurricane Sally. However, the USDA weekly crop conditions survey showed 45% of the crop was in “good” and “excellent” condition, unchanged from a week earlier and up from last year’s 39% rating.  

Hogs: October lean hog futures closed the day up $2.725 at $68.325, while December futures gained $2.55 to close at $64.10. Future prices were supported in part today as prices are trading well below the CME cash hog index, which is at the highest level since August 2018—with the latest price reported at $71.29. Also supportive early this week is a rising pork cutout value, jumping another $4.37 at midday, with loins, picnics and bellies leading gains. This will be a big week on the report front, with USDA’s monthly Cold Storage Report coming this afternoon and its Quarterly Hogs & Pigs Report slated for release Thursday.  

Cattle: December cattle fell 42.5 cents to $110.175 and November feeders were down $1.55 at $141.175. Futures traded lower today, in part because there are few signs of a bottom in boxed beef prices and expectations for Friday’s Cattle on Feed Report to show record on-feed numbers. Cash cattle bids have been limited and most expect negotiated cash cattle prices this week will end up steady at best as packers seem content with their inventories after last week’s trade of 105.00. There would seem to be little reason to be in a hurry to pick a bottom. Placements will be up 4% to 8% from a year ago in Friday’s report, most likely, and placements will remain large for the rest of the year, keeping COF levels at a record. Boxed beef was mixed at midday on moderate demand for moderate offerings. Sales were active at 100 loads, compared with just 106 all day on Monday.