After the Bell: Grains, Soy Rally on Weather Concerns and Fund Buying

Posted on Wed, 02/24/2021 - 14:54

Corn: May corn futures rose 4 1/2 cents to $5.57 and December gained 7 cents to $4.76 3/4.  Futures moved higher for a third session on increased fund buying ahead of the weekly USDA export sales report Thursday morning. Gains were supported as China’s May Dalian corn futures rose 4 cents to $10.00 a bu. overnight. But USDA didn’t announce any daily sales. Traders are looking for sales in the week ended Feb. 17 to range from 500,000 MT to 1.3 MMT, compared with 999,200 MT sold the week earlier and 864,600 MT sold a y ear ago. Rising economic inflation speculation helped to attract new buying this morning. Reflation expectations are rising fast, and so is the flow of cash into exchange-traded funds that track inflation-protected bond and commodities.   

Soybeans: Old-crop soybeans settled high-range with gains ranging from 17 ¼ to 18 ¾ cents, and new-crop up 10 ¾ to 16 ¼ cents. Old-crop stopped just shy of Tuesday’s highs, while new-crop registered new contract highs. Soybean oil also hit new contract highs, climbing 96 to 188 points, with nearby contracts leading gains. Soymeal settled well off their highs with gains ranging from $1.10 to $2.70. USDA’s tight carryover projections for both the 2020-21 and 2021-22 marketing years continue to lift futures and emphasize the need for soybeans to pick up even more acres than the 90 million USDA projected at its outlook forum last week. Tight stocks also underscore the need for Brazil’s bean crop to live up to record-setting expectations. Late planting has slowed early harvest efforts, with rain in northern regions further stretching the end of the growing season and slowing harvest.  

Wheat: Wheat futures finished near session highs with gains of 11 to 15 1/4 cents in SRW contracts, around 15 cents in HRW contracts and 7 1/4 to 10 1/2 cents in HRS contracts.  Wheat futures were supported by broad strength in the commodity sector today, including the corn and soy markets. The push above overhead resistance triggered buy stops, which extended price gains. Fundamental support came from forecasts calling for warm, dry weather in the Southern Plains the next two weeks, which wouldn’t be ideal for a crop trying to recover from last week’s hard freeze. The extended forecast also favors warmer- and drier-than-normal conditions in the region through May. The ability of the market to build on today’s gains on Thursday could lie with weekly export sales.  

Cotton: May cotton futures today closed up 102 points at 93.69 cents and set a fresh contract and more than 2.5-year high. December futures gained 91 points at 87.66 cents and also hit a new contract high. The cotton futures market continues to perform in very strong fashion, with bulls eyeing the next upside price objective at the 2018 high of 96.50 cents, basis nearby futures. Cotton futures continue to pull buying support from the solid gains in the grain futures markets. The Nymex crude oil futures market pushed to a 13-month high today and that was also supportive for the fiber.

Hogs: April hog futures rose the $3 limit to $89.425 with June up $2.275 to $95.90. The June pork cutout futures rose $1.275 to $100.475. Cash hogs were sharply higher at midday as packers bid up to acquire supplies.  Strong demand expectations have been supportive and offset the large supply of market-ready hogs. Average weight market hogs in Iowa-southern Minnesota in the week ended Feb. 20 fell to 286.8 lbs., down 0.4 lb. from a week earlier but still 1.2 lbs. above a year ago. That’s encouraging sign that supplies may be peaking.  The midday pork cutout value rose $2.56 to $95.31.  Hams and picnics were sharply higher. Sales were moderately active. Chinese cash hog prices are depressed; however, this is likely to reverse and create opportunities for exporters. Researchers at a Beijing veterinary institute have noted that survival rates of piglets are low and attribute this is to “winter weather factors.” Export sales in the morning will set the tone in early trading Thursday.  

Cattle: April live cattle futures closed up $1.025 at $122.225 today and June live cattle rose 97.5 cents at $120.10. March feeder cattle futures rose $1.80 today to close at $140.375. Futures markets were supported on talk of stronger cash cattle bids. Expiring February futures are trading back above $116, compared with a few cash trades Wednesday near $114.00. April continues to hold a large $8 premium to cash and that may limit futures rallies without confirmation of strong packer bids. Boxed beef prices were mixed at noon today, with Choice up $1.11 and Select losing 64 cents. Choice cutout values this week traded above $240 for the first time since November.