After the Bell: Grains, Soy Extend Weekly Declines on Weather, China Buying Concerns

Posted on Fri, 06/26/2020 - 14:33

Corn: July corn futures today closed down 1/4 cent at $3.17 and for the week lost 15 1/2 cents. December corn futures today fell 2 3/4 cents to $3.25 1/4 and hit a fresh contract low early on. For the week, December corn lost 20 cents. This was a dreadful week for the corn market bulls, and the serious technical damage inflicted on the charts suggests more downside price pressure in the near term. The big speculative fund traders early next week will be looking to build their short futures positions. Monday may see quieter dealings ahead of the important USDA reports on acreage and June 1 inventories next Tuesday. History shows these June USDA reports tend to produce higher volatility in their immediate aftermath. Traders are expecting the June 30 reports to show corn planted area fell about 1.85 million acres from March intentions, while June 1 inventories declined about 240 million bushels from last year, but reflecting the lowest March-May use in seven years.

Soybeans:  August beans fell 5 1/2 cents Friday to close at $8.60, capping a 16-cent weekly drop. November futures fell 19 ½ cents this week to $8.60. August meal extend its weekly drop $2.70 to $285.30, capping a $4 weekly decline. August soyoil fell 1.29 cents this week to 27.41 cents. Favorable weather pushed soybeans lower this week and Chinese purchases were smaller than trade reports indicated. Prices extended losses at midmorning after the Wall Street Journal said U.S. 'meddling' in Hong Kong, Taiwan, other matters could jeopardize Chinese goods purchases under the trade deal.  USDA’s daily reporting service did announce private exporters sold 132,000 MT to China for new-crop delivery. China needs to be buying much higher quantities to reach its commitments under the Phase 1 deal. Next week’s focus will be on the USDA’s Acreage and Quarterly Grain Stocks Reports on June 30.

Wheat: Futures tumbled to new lows with December SRW prices falling 11 1/4 cents for the day and week to $4.84. December HRW fell 9 ½ cents on Friday to $4.41 and down 8 3/4 cents for the week. Spring wheat futures were down 26 ¼ cents this week. Futures fell on increased technical selling and liquidation amid an accelerating harvest and abundant global supplies. Expiration of July options and positioning ahead of the first notice day for delivery against the July contract added to pressure Friday. Prices accelerated lower after the Wall Street Journal reported on Friday that the U.S. intervention in Chinese interests could risk the Phase 1 trade deal and that spooked traders already worried about a surge in coronavirus cases. Traders will closely examine the acreage updates from the USDA on Tuesday and Stats Canada on Monday next week. Most are looking for small reductions in both nations from estimates in March.

Cotton: July cotton futures slumped 126 points to close the week, but price action was far less dramatic in other contracts to close the week, with deferred months settling 10 to 20 points lower and within recent consolidated trading ranges. December cotton edged 31 points lower for the week. Analysts polled by Bloomberg expect USDA to trim its cotton planted acreage estimate to 13.2 million on Tuesday, which would be a 500,000-acre decline from March intentions and a 540,000-acre retreat from year-ago. But a wide range of expectations signals a lot of uncertainty on that front. While cotton prices at their face value gave producers little incentive to plant the crop, farm programs may have. That said, top-producing Texas has 23% of its crop in “good” to “excellent” shape and 40% in the ”poor” to “very poor” categories, signaling poor yields could hold back production.  

Hogs: Lean hog futures closed out the week on a sour note with losses of $1.65 to $3.525 today. Summer- and fall-month contracts posted new lows. For the week, August hogs plunged $4.675. A Wall Street Journal report saying China is subtly warning the U.S. that American pressure on Hong Kong and other matters could jeopardize the Phase 1 trade deal weighed on the hog market today. While China needs U.S. pork, the report rattled the markets, causing traders to remove more premium futures hold to the cash index. With the poor close to the week, bears carry momentum into next week’s holiday-altered trading schedule. USDA’s Hogs & Pigs (H&P) Report signaled kills will run about 12% to 13% above year-ago through July. Combined with increased carcass weights, that means there will be a lot more meat for demand to chew through.  

Cattle: August live cattle futures closed down $0.05 at $96.025 and for the week were up $0.625. August feeder cattle futures fell $0.65 to close at $132.60 and for the week gained $0.05. While this week’s price action in cattle futures was not overly impressive, the bulls did manage to stabilize prices. Next week the bulls will try to build better support from signs of improving demand after the drop in beef prices slowed this week. Friday’s noon beef report showed Choice grade cutout value fell by 68 cents and Choice was down 17 cents. Movement was decent Friday at 95 loads. Beef export sales and shipments last week rose to the highest since January, a sign that beef prices have reached levels that are uncovering demand. Still, rallies will be limited until the cash cattle market finds a bottom.