After the Bell: Soybeans, Corn Rise to 6 1/2-Year Highs on Shrinking Supply Outlooks

Posted on Tue, 01/05/2021 - 14:46

Corn: Corn futures settled in the upper half of today’s trading range with gains of 4 to 8 ¼ cents through the December 2021 contract. Futures stopped short of penetrating Monday’s high. The combination of fresh money flow, strong Chinese buying, South American weather threats and tightening stocks at home and around the world fueling have fueled frenzied buying in corn and other ag commodities to close 2020 and open 2021. Strong rallies in the soybean, wheat and crude oil markets added to bullish optimism. While more organized showers fell for South America over the past 24 hours, traders are more focused on sliding crop estimates and the warm, dry two-week outlook for Argentina. The market fully expects USDA to trim its U.S. and global corn ending stocks projections on Jan. 12.

Soybeans: March beans closed 34 cents higher at $13.47, below new highs at $13.73 1/4. March soymeal rose $8.10 at $431.80 and March soyoil jumped 1.47 cents to 43.60 cents. Soybeans gave back some of the early gains near the close on profit taking and closed below yesterday’s high. The path of least resistance remains higher, but this market is starting to show signs it will need another positive jolt on the weather or demand to sustain this current steep uptrend. Funds were said to be buyers of 40,000 contracts today. Market bulls still see upside potential and believe that new-crop prices may soon need catch up to reflect the potential that this can be a multi-year year issue without big U.S. plantings and a good growing season.  

Wheat:  March SRW wheat rose 12 cents to $6.54 and March HRW futures gained 9 3/4 cents to close at $6.09 1/4. March spring wheat rallied 8 1/4 cents to $6.07 1/4. Wheat prices rose to the highest in six years on lower state crop ratings, more talk of Chinese and Brazilian interest for wheat and technical buying. The weakness in the dollar and strong rallies in other commodity markets added to the bullish tone in wheat. Gold traded near an eight-week high as U.S. 10-year inflation expectations topped 2% for the first time since 2018 on hopes that monetary stimulus and government aid policies will drive demand in the post-vaccine world. The higher inflation expectations are boosting speculation in commodity investments.  

Cotton: March cotton futures closed up 138 points at 80.35 cents today, nearer the session high and marking a 25-month high. December cotton closed up 70 points at 76.11 cents.  The raw commodity markets, led by Nymex crude oil prices, which hit a nine-month high today and pushed above $50 a barrel, are on fire to start the new year, including cotton. It appears the inflation trade is back in vogue among the big speculative fund traders, what with global financial systems awash in liquidity from central banks trying to fight the negative impact of the pandemic. Americans also now have some more spending money for items like apparel, as government stimulus funds began arriving for Americans last week.

Hogs: February lean hog futures finished 30 cents lower. The April through December contracts firmed 7 1/2 to 70 cents on the day. The June, July and December contracts posted new contract highs, while the August contract matched its high from Monday. As the adage goes, a rising tide lifts all boats. That carried through in the hog market today as deferred hog futures rode a strong wave of broad-based buying in the commodity sector higher. That, more than anything fundamental, was the reason for today’s price strength. February hogs were capped by the more than $10 premium the lead contract holds to the cash index.  

Cattle: February live cattle futures closed the day up $2.75 at $115.05, while April live cattle gained $2.85 at $119.10. March feeders rose $1.40 to close at $137.425.  After Monday’s solid losses, the cattle futures today enjoyed solid support from the updraft in many raw commodity futures markets that has the big speculators once again playing the long side. Most of Monday’s losses were erased today. Today’s noon beef report showed Choice grade price down $3.84 and Select down 77 cents, on movement of 112 loads. Today’s cattle slaughter was estimated at 118,000 head compared to 116,000 last week and 123,000 head a year ago at this time.