After the Bell: Corn Hits New Lows, Wheat Pares Weekly Decline; Livestock Plunge

Posted on Fri, 04/03/2020 - 15:02

Corn: May corn futures closed down 2 3/4 cents at $.3.30 3/4 today and hit a new contract low. For the week, May corn lost 15 1/4 cents. December corn futures gained a penny today to close at $3.50 3/4. For the week, December corn fell 13 1/2 cents. Nearby May corn futures dropped below important near-term chart support and to a new contract low today, which will likely embolden the funds to further play the short side of the market next week. However, December corn held above this week’s contract low of $3.46 3/4 on new sales to China and wet U.S. forecasts suggesting a slow start to the planting season. Plunging oil prices the past three weeks have put a dagger in the ethanol industry, which will make it very difficult for the corn market to mount a sustained recovery—barring a major weather market during the planting and/or growing seasons.

Soybeans: Soybean futures posted losses of 1 1/4 to 4 1/2 cents through the January contract amid bear spreading. Meal futures finished $2.30 to $5.90 lower on bear spreading. For the week, May soybeans dropped 27 1/4 cents to $8.54 ¼ and May soymeal fell $19.90 to $303.20. To halt the selling in the soybean and meal markets, bullish news must develop out of South America. Brazilian and Argentine soybean crop estimates are dropping, but it would likely take major backlogs or strikes at ports to spur a round of active buying in the soybean market. The Brazilian real posted a new low versus the U.S. dollar today and the Argentine peso is also very weak. That gives South American supplies a strong competitive advantage without some sort of export delay.  

Wheat: Prices ended higher, paring weekly losses from two-month highs. May SRW wheat rose 7 1/2 cents to $5.49 ¼ on Friday, paring the weekly decline to 22 cents. May HRW wheat fell 14 1/4 cents this week to close at $4.72. Spring wheat futures fell about 7 cents this week. Prices held support on early-week long liquidation by fund managers to start the new month. Bouncing back today is a positive signal for next week. The focus next week will be on world demand and the season’s first crop ratings for U.S. winter wheat. The growing exporter bans or quotas on wheat and flour may spur additional stock-building purchases by importers. Brazil flour millers are asking for relief from the 10% import tariff. They may want US HRW wheat.  The Russian government approved by decree the Ag Ministry proposal to limit its grain exports to 7 MMT through June amid the Covid-19 outbreak.

Cotton: May cotton futures closed up 99 points at 50.98 cents today and for the week lost 35 points. December cotton gained 96 points to 52.08 cents and for the week fell 141 points. The coronavirus pandemic has had most of the business world off balance now for weeks. Textile and clothing makers are nervous about the length of the shelter-in-place orders and retailer orders for the upcoming summer and fall clothing lines. U.S. unemployment claims the past two weeks surged nearly 10 million and that may be just the beginning of job losses. The market found some support from a late-week rebound in oil prices. OPEC and other oil producers will hold a video conference Monday and a deal to curb output would help to stabilize oil prices, down more than 70% before this week’s sharp rebound.  

Hogs: Mostly sharply lower to limit down price action today, except in the far deferred futures. April hogs fell $4.475 to $40.225 and June fell the expanded $4.50 limit to $48.325.  Since March 24, April plunged more than $26 and June tumbled almost $25. The biggest challenge is keeping slaughter plants running and workers happy in the middle of a pandemic. Slaughter this week fell to 2.618 million head, down 136,000 head from a week earlier but still up from 2.464 million a year ago. Concerns about processors’ ability to maintain a needed slaughter pace have reached a fevered pitch. Packers have cut next week’s kill, and some have increased spacing on the fabrication line. There are some talking that packers are backing off forward commitments in favor of spot negotiated purchases.  The good news going home tonight was midday pork cutouts rose $1.51 on good sales.  

Cattle: April live cattle futures closed down the $4.50 daily trading limit Friday, at $88.325. June live cattle fell $2.225 at $80.85. For the week, April futures plunged $12.625. May feeder cattle futures on Friday fell $3.55 at $108.10 and for the week lost $12.825. All three futures contracts hit new lows today. Next week will see more gloom setting in over the U.S. and global economies, as the Covid-19 pandemic continues to strangle global commerce. Such will continue to be very bearish for livestock markets. The cattle markets are likely to remain pressured by declining wholesale beef prices and lighter grocer demand to refill coolers. There are also concerns regarding slaughter capacity should Covid-19 shut down packing plants. Choice grade beef fell another $0.69 and Select cutout dropped $1.11 Friday at midday. Choice cutouts are down $25 since last week, giving back about half of last month’s surge.