After the Bell: Grains, Soy and Livestock Tumble Amid Commodity Rout

Posted on Thu, 03/18/2021 - 14:55

Corn: Corn faced pressure throughout the overnight and day trading session and futures ended near session lows. Old-crop futures settled 10 ¾ to 12 ¼ cents lower, while new-crop futures posted losses around 7 cents. USDA announced a 696,000 MT daily corn sale to China, marking the third large daily sale announcement in a row and pushing weekly sales to 3.076 MMT. The sales could be politically motivated as they came leading up to two days of high-level talks between U.S. and Chinese officials. USDA’s weekly export sales update was also encouraging, with old-crop corn sales of 985,900 MT topping expectations and corn exports hitting a marketing year high of nearly 2.2 MMT.   However, market response was also tempered by news China was working to lessen the amount of corn used in feed and ongoing reports the country’s hog herd rebuilding has been compromised by a resurgence of African swine fever.  

Soybeans: May soybeans closed down 25 1/2 cents today at $13.92 1/4 a bushel. Prices closed near the session low today and settled at a three-week-low close. Profit taking was featured. May soybean meal closed down $6.70 at $398.20 today. Prices closed at a three-month-low close. May bean oil lost 108 points today to close at 53.52 cents.  Profit taking was featured in soybeans today, while soybean meal saw increased technical selling pressure as prices continue to trend lower on the daily bar chart. Bean oil also saw fund and spread profit taking, but was also pressured by a big drop in crude oil prices today. Weather leans price-negative for soybeans and products. In Argentina, more improvement in soil moisture is expected in the next two weeks, especially after rainfall during the past four days proved better than expected. Drier weather will aid soybean harvesting in Brazil with exporters ramping up shipments.

Wheat: May soft red winter wheat futures closed the day down 9 1/2 cents at $6.30 1/2 and May hard red winter what futures closed down 14 cents at $5.87. Both markets hit multi-week lows today and closed near their daily lows.  Extended overnight losses came on weakness in crude oil, a stronger U.S. dollar and general negative commodity price action.  USDA’s export sales report for the week ended March 11 showed wheat sales rose to 390,000 MT, up 40% from the prior four-week average with new-crop sales reported at 139,000 MT. China was the top buyer for both marketing years but most of the old-crop business was switching of sales made previously to unknown destinations. The recharging of U.S. soil moisture has weighed on new-crop values this week. Additionally, drought has been eliminated from central Kansas and eastern Nebraska. Another round of widespread showers impacts the southern and central Plains next week, which will further push drought to far western HRW producing regions.  

Cotton: May cotton fell 106 points to 85.45 cents and December futures fell 113 points to 82.59. The market was pressured by rising interest rates, a stronger U.S. dollar and tumbling oil prices. Oil futures fell as much as 6.2%, the biggest intraday drop since October, on demand concerns as Chinese demand has slowed and a shaky Covid-19 vaccine rollout in parts of the world spell trouble for a recovery in demand. Rising U.S. long-term interest rates to the highest in more than a year pushed the U.S. dollar higher on the foreign exchange markets. The dollar strength curbs the appeal of commodities, triggering widespread selling throughout the commodity markets today. The general commodity sentiment shifted today, and cotton was not spared the selling pressure. The Bloomberg Commodity index tumbled more than 2.4% to the lowest since Feb. 12.  

Hogs:  April lean hog futures closed up $0.625 at $94.30. June hogs closed down $2.40 at $99.92 today. June prices closed near the session low today after both contracts hit new highs earlier. So far, it appears the was just routine profit taking in June lean hogs after recent solid gains. However, bulls do not want to see follow-through selling pressure on Friday. Nearby lean hog futures are at their highest levels in 6 ½ years. Be aware that when rallies start to steepen after extended moves, it time to watch for exhaustions. This morning’s weekly USDA export sales report showed U.S. pork sales in the week ended March 11 rose to 39,700 MT, up 5% from the prior four-week average. Mexico bought 18,200 MT and China was a net buyer of 5,800 MT. Shipments remains an active 40,600 MT, 5% above the prior four-week average.   

Cattle: April live cattle finished 85 cents lower, while the June through December contracts fell $2.20 to $2.65. Feeder cattle closed 62 1/5 cents to $3.55 lower through the November contract. Cattle futures failed to sustain early price gains, as broad-based selling in the commodity sector eroded buyer interest and weighed on the market. Selling in April live cattle wasn’t as pronounced as deferred contracts, largely because of steady to slightly firmer prices in the cash market. But traders did trim the premium the lead contract holds to the cash market. Most deferred live cattle futures posted bearish key reversals after marking new contract highs before finishing below Wednesday’s lows. That could lead to follow-through selling pressure to close out the week. USDA will also release its Cattle on Feed Report Friday after the close and sometimes traders like to take profits ahead of that data.