After the Bell: Grains, Soy Close Higher Watching Weather and New Demand

Posted on Mon, 10/19/2020 - 14:48

Corn: December corn futures closed the day up 3 1/4 cents at $4.05 1/4 and closed at a 12-month-high close. Corn futures in the U.S. were supported in part by the rally to new highs (near the equivalent of $10 a bushel) on Dalian corn futures in China. USDA on Monday made two daily corn sales announcements. Private exporters sold 345,000 MT to unknown destinations and 123,000 MT to Mexico, both for 2020-21 delivery. USDA also announced the U.S. inspected 911,012 MT of corn for export the week ending Oct. 15, which was a bit higher than expected. USDA also made big upside revisions to the previous week. This afternoon’s USDA weekly crop progress reports are expected to show that 57% of the U.S. corn crop has been harvested as of Sunday, compared to 41% last week.  

Soybeans: Soybean futures uncovered support near Friday’s during the overnight session, but the market enjoyed gains through the day trading session. Soybean futures settled mid- to high-range and up roughly 4 cents through the August contract. Soymeal posted gains ranging from $1.20 to $5.70, with nearby futures leading to the upside. Soybean oil posted losses of 28 to 46 points. Bullish attitudes continue to lift soybean futures and a number of commodities, with China aggressively buying U.S. soybeans and the Brazilian planting season off to a slow start. Weekly soybean export inspections came in at 2.174 MMT the week ending Oct. 15, which was near the upper end of expectations. Meanwhile, there is increasing chatter about a late start to Brazil’s next shipping season, as dry weather has planting running at its slowest level in a decade.  

Wheat: Futures extended last week’s gains and closed in the top half of the daily price ranges. December SRW wheat was up 1 ¾ cents to $6.27, December HRW gained 4 ¼ cents to $5.63 and December spring wheat gained 9 ½ cents to $5.69 ¼. Wheat futures traded higher, touching the highest for the nearby SRW futures since December 2014. HRW markets led wheat higher from the mixed trade at midmorning as the focus continues on dryness in Russia and the U.S. Plains, with little moisture relief in the forecasts.  Russia will see a few showers in southern and northern areas, but core central areas are expected to remain dry. The U.S. Southern Plains through the next two weeks will see close to normal precip in the eastern areas, but the central and western areas will get lighter amounts. With prices near 6-year highs, the incentive to plant more wheat will remain high into 2021. Many are looking for U.S. winter wheat acres to rise 4% to 5%.   

Cotton: December cotton futures closed the day up 124 points at 71.16 cents, hitting a nearly nine-month high. Speculator buying interest is playing a big part in the recent surge in the cotton market, as the charts have become more bullish. It’s likely the big “fund” traders added to their long positions Monday.  China’s economy grew 4.9% in the July-to-September quarter compared with the same months last year, below the 5.2% growth forecast by analysts polled by Reuters, but still showing China’s economy has recovered from the Covid-19 lockdowns more quickly than the other major economies. Worries about the extent of damage done to the southeastern U.S. cotton crop from the recent hurricane is also keeping sellers timid.  

Hogs: Mixed closes with December closing higher and deferreds ending lower. December hogs rose $1.625 to $71.425, February fell 10 cents to $70.85 and April fell $1.325 to $72.325. December remained supported by its discount to the CME Index, which fell 26 cents to $78.23--the first decline since August. National direct hogs Monday morning were down $2.06 on reduced packer demand. However, wholesale pork cutout value rose $1.06 and back above $100, led to the upside by strength in bellies and hams. Sales were moderately active 178 loads at midday. Deferred futures fell on worries about export demand. U.S. pork export sales slowed last week. Sales to Mexico fell to a four-week low but sales to China dropped to an eight-week low and included a sales reduction.   

Cattle: Live cattle futures settled $3.05 to $3.475 lower through the June contract. Feeder cattle finished $3.375 to $4.95 lower. The cattle market faced heavy followthrough selling today. Much of the price pressure stemmed from technical-based selling as key support levels were violated. Funds were active on the short side of the market today. As of Oct. 13, managed money accounts were net long 54,322 live cattle futures contracts, though that position was trimmed the final three days last week and today. There was likely some fresh money that moved into the short side of the market today. Funds were already net short feeder cattle, so today’s selloff was mostly new short money.