After the Bell: Grains, Soy Inch Lower on Harvest Pressure, Stronger Dollar

Posted on Wed, 09/23/2020 - 14:05

Corn: Futures posted losses of 1/2 cent to 1 3/4 cents through the December 2021 contract following a relatively light day of trade. Selling pressure wasn’t heavy in the corn market by any means today, but a lack of fresh supportive news kept futures under pressure for much of the day. With harvest activity picking up, seasonal selling pressure is a greater risk on days when supportive news is light. Traders will look to weekly export sales for price direction early Thursday. Traders expect weekly corn sales between 1.05 and 1.8 MMT. USDA reported daily sales of 696,000 MT during the week ended Sept. 17, so sales should rather easily top the low end of expectations. Of particular interest will be Chinese purchases of U.S. corn.  

Soybeans: Prices end lower for a third straight session despite new Chinese sales announcements. November beans were down 5 1/4 cents to $10.14 1/2. December meal rose $3.60 to $344.60 as soyoil tumbled 80 points to 32.80 cents. Futures opened steady to firm overnight but followed Chinese futures lower into the break. Prices rebounded after the reopening following new sales announcements to China this morning. USDA’s daily export sales reporting service announced private exporters sold 132,000 metric tons (MT) of soybeans to China and another 126,000 MT sold to unknown destinations, both for 2020-21 delivery. The market rally is capped by open harvest weather and active sales expected from producers out of the field. Spreads were steady today with November closing at a 3/4-cent premium to March, a sign the market wants your beans now, not later.  

Wheat: Futures end lower and near the daily lows. December SRW fell 9 cents to $5.49 and December HRW was off 7 1/2 cents to $4.84 1/4. Spring wheat was down about 6 cents. The rally in wheat prices is showing signs of losing momentum. The current USDA world ending stocks forecast is for a record 319.4 MMT, well above the prior record of 299.8 MMT. Solid gains in the dollar for a third day were also negative. U.S. wheat is having troubles competing with other exporting nations and the dollar’s surge only adds to those problems. Russian origin once again dominated the Egyptian tender yesterday, with the GASC purchasing 405,000 MT of milling wheat. The average purchase price was $256.60/MT, approximately $6 higher than the purchase price in the previous tender and marks the highest purchase price since January 2019. Russia now accounts for 82% of Egyptian purchases so far this season.  

Cotton: December cotton futures closed the day down 29 points at 65.25 cents. The cotton futures market bulls were a bit timid today, given a wobbly U.S. stock market, a surge in the U.S. dollar index to a two-month high today, and big daily losses in the gold and silver markets. Also, U.S.-Chinese trade and political tensions continue to rise. President Donald Trump used a virtual speech at the United Nations General Assembly Tuesday to assail China, blaming Beijing for the coronavirus pandemic. Chinese state-run media are denouncing the TikTok deal as "an American trap" and a "dirty and underhanded trick" as sentiment in Beijing swings against the proposal. And a new study shows China's policies have harmed U.S. industries. China's economic planning and targeted subsidies have increased the competitiveness of Chinese firms to the direct detriment of U.S. industry, according to the academic study.  

Hogs: October lean hog futures climbed $1.175 today, climbing to the highest level since March. But the rest of the market saw a quieter day of trade, consolidating recent gains and settling 22 ½ cents lower to 25 cents higher. Lean hog futures have benefitted from several reminders of pork demand strength this week, but uncertainty heading into USDA’s Quarterly Hogs & Pigs Report tomorrow has tempered buying interest. Wide ranges of pre-report trade guesses signal the market is not sure just how processing backlogs this spring and summer impacted hog numbers. On average, analysts are calling for a 0.1% year-over-year rise in USDA’s Sept. 1 hog herd estimate, with hogs kept for breeding expected to fall 2.5% and market hog inventories to climb 0.6%. See “Evening Report” for more details. This overshadowed yesterday’s Cold Storage Report that reflected a smaller rise in frozen pork stocks from July to August than is typically seen, with stocks 23% under year-ago levels at the end of August.  

Cattle: October live cattle futures closed up $0.675 at $107.15 today, while December live cattle gained $1.025 to close at $111.20. November feeder cattle futures rose $0.475 to close at $141.65 today. Tuesday afternoon’s USDA Cold Storage report showed roughly a 20 million-lb. month-to-month increase in frozen beef stocks during August, which was generally in line with the five-year average. That’s encouraging given reduced restaurant consumption due to the Covid-19 restrictions.  Traders are awaiting Thursday morning’s weekly USDA export sales report. Export demand for U.S. beef has been good, as seen in recent weekly reports. Friday, USDA releases the monthly Cattle on Feed Report.