After the Bell: Corn, Wheat Rally on Demand, Fund Buying Ahead of USDA Data on Friday

Posted on Thu, 04/08/2021 - 14:49

Corn: May corn jumped 19 1/4 cents to $5.79 3/4 and December rallied 9 1/4 cents to $4.94 ¾. Corn prices followed wheat higher overnight and then surged sharply higher after the reopening. Strengthening cash basis bids and western Midwest ethanol plants pushing bids rallied old-crop futures. The market is trying to entice some pre-planting cash sales.  Some of the buying was tied to fresh fund buying and talk of new overseas demand ahead of the USDA’s Supply & Demand update Friday morning. There were unconfirmed rumors China was asking for offers for old-crop corn for late summer shipment and maybe some new-crop shopping. Agricultural commodities are poised for a “mini supercycle” as China’s rampant demand keeps supplies tight, according to Alex Sanfeliu, head of Cargill’s trading unit, Bloomberg reported today.  Commodity Weather Group this morning reiterated their outlook for a hot and dry U.S. summer, due to North American Multi-model Ensemble weather update today.  

Soybeans: May soybeans gained 6 1/2 cents at $14.15 3/4 a bushel today. Prices closed nearer the session high today. May soybean meal closed down $1.30 at $406.80 today and May bean oil gained 53 points at 53.38 cents. Selling interest in the futures markets was limited today ahead of Friday’s USDA’s Supply & Demand Report due out at 11:00 a.m. CDT. Traders will be looking for USDA to trim its old-crop U.S. soybean carryover projection marginally from an already tight 120 million bu. last month. There will be no new-crop USDA projections until the May WASDE report. USDA’s planting intentions survey showed farmers planned to sow about 2.4 million fewer acres of U.S. soybeans than traders had expected. New-crop November soybean futures continue to consolidate above the prior highs from early March but may need a fresh weather scare or demand news event to begin trending higher.  

Wheat: May SRW wheat rose 12 1/2 cents to $6.28 3/4, May HRW rallied 13 1/4 cents to $5.76 1/2 and May spring wheat was up 15 3/4 cents to $6.40 1/4. Prices rallied overnight and held strong through the session on unexpected Chinese buying of U.S. wheat in today’s USDA weekly export sales report. There were also rumors that China is asking for offers on HRW wheat for summer delivery. Earlier this week. USDA reported 130,000 MT of SRW wheat sold to an unknown buyer, which many now assume was China as they rebuild stockpiles after auctioning government reserves to boost feed supplies deflate record domestic corn prices. The official Chinese government agency this morning raised their estimate of wheat feeding for the season to 38 MMT, up from 22.5 MMT last season.

Cotton: Futures rallied today, pushing to the highest level since March 25 and settling high-range and up 107 to 191 points for the day.  Old-crop export sales of cotton at 269,900 RB the week ending April 1 were up 8% from the week prior with USDA also reporting 49,000 RB in sales for 2021-22. Perhaps more importantly, export shipments jumped 11% from the prior four-week average to 371,700 RB. With 17 weeks remaining in the 2020-21 marketing year, accumulated exports of upland cotton account for 69% of USDA’s forecast for the season. That’s well ahead of the usual 59% for this point in the season. Aggressive exports to date paired with expectations for another cut to the 2020-21 cotton crop have analysts expecting a 90,000-bale reduction to its U.S. ending stocks forecast for 2020-21

Hogs : June lean hogs rose $0.80 at $108.70 today. Prices closed near the session high today and hit another contract high. The powerful bull run in lean hog futures rolls on—now the third-strongest bull move in hog futures in the 51-year history of trading—and prices are still climbing. Tightening U.S. hog supplies and notions African swine fever will keep China as a major buyer of U.S. pork remain the supportive elements. However, this morning’s weekly USDA pork export sales were disappointing. Pork sales last week fell 45% from last week’s marketing-year high and were 22% below the prior four-week average. While Mexico continued to be an active buyer, Chinese net purchases slowed to 1,200 MT, down from nearly 30,000 MT a week earlier.

Cattle: Live cattle futures finished widely mixed with prices ranging from 25 cents lower to $1 higher through the December contract. Feeder cattle posted losses of 27 1/2 cents to $1.075. April live cattle futures were supported by strengthening cash cattle and wholesale beef prices. Cash cattle traded mostly in the $121 to $122 range earlier this week, though asking prices for unsold showlists are reportedly priced at $123 and up. Boxed beef prices continue to surge, with Choice values pushing to what would be record levels aside from last year’s Covid-induced price explosion. Strengthening cash fundamentals give funds a reason to grow their net long position in the live cattle market that was at 78,651 futures contracts as of March 30 and has grown from there.