After the Bell: Soyoil Leads Higher But Showing Exhaustion Signs; Livestock Rally

Posted on Tue, 03/23/2021 - 12:34

Corn: May corn futures closed up 2 1/4 cents at $5.51 1/4 today. December corn rose 1 3/4 cents at $4.69 3/4. The corn futures bulls continue to show resilience after market downturns to suggest there is presently a solid floor under the market. The May/July corn spread has gained 10 cents since the March futures contract expired and combined with firm cash corn basis levels provide fodder for market bulls. Trading during the next week will be dominated by positioning ahead of the USDA’s March 31 estimates of quarterly stocks and spring planting intentions. Corn also has bullish potential on yield risk for the Brazilian winter corn crop, Chinese demand, strong U.S. weekly export loadings and American drivers returning to pre-pandemic gasoline consumption rates.      

Soybeans: Soybean futures finished 5 3/4 to 8 3/4 cents higher through the November contract, though that was in the lower half of today’s range. Soymeal futures closed $2.20 to $3.30 higher. Soyoil futures ended 650 points higher to 90 points lower through the December contract. Soyoil was the story of the day in the soy complex again today. Futures sprinted to new highs on surging global edible oils prices and aggressive fund buying. Soybeans and soymeal followed to the upside in widespread buying across the soy complex. But as buying waned in soyoil, especially in deferred contracts, beans and meal came well off their session highs. The old adage is that oil-led rallies don’t typically have staying power, so the soyoil market needs to be watched closely for topping signs.   

Wheat: May SRW wheat closed up 7 1/2 cents at $6.34 3/4 today. Prices closed near mid-range today and saw some short covering after hitting a seven-week low earlier today. May HRW wheat closed up 3 3/4 cents today at $5.83. Prices closed nearer the session high today and hit an 11-week low earlier today. Spring wheat futures closed 4 to 4 1/2 cents higher. Winter wheat ratings improved after recent moisture. Some state wheat condition ratings released Monday afternoon showed widespread improvement this past week. Crops rated “good” to “excellent” rose 8 percentage points in Kansas and Colorado, 5 points in Oklahoma, 2 points in Texas, with SRW ratings rising 7 points in Louisiana and 4 points in Arkansas while Mississippi ratings fell 4 points. However, the northern Plains remain in severe drought with similar conditions in the Canadian Prairies.  

Cotton: May cotton fell 109 points to 83.53 cents and December futures were down 88 points to 81.32 cents. The cotton market declined and closed near session lows as traders exited longs amid worries about extended trouble for demand with a rising U.S. dollar and anger from China. Crude oil collapsed today on demand worries and overproduction, adding to the general negative sentiment in cotton. Meanwhile, Federal Reserve Chairman Jerome Powell said prices would rise this year as the pandemic recedes and Americans are able to go out and spend, but he played down the risk that this would spur unwanted inflation. The combination of Powell’s comments and falling crude oil prices contributed to general lack of new fund buying in commodities as grain prices came off their session highs by the close.  

Hogs: Lean hog futures rallied $1.225 to $1.775 today, with the June contract leading gains. April futures set a new contract high of $96.625 and May futures looked poised for a test of last week’s contract highs. Traders were encouraged by continued cash market strength, with cash hog bids jumping a national average of $3.41 today. The CME lean hog index has marched higher since the start of the year, with strength in the product market also helping to push the index higher. The cutout value has extended gains even farther above the $100.00 per cwt. threshold this week, with the cutout surging $6.29 this morning and movement strengthening to 240.61 loads in the face of the price runup.  Attention the next two days will be split between Thursday’s weekly Export Sales Report and USDA’s Quarterly Hogs & Pigs Report.  

Cattle: April cattle rose 35 cents to $119.125 and June cattle advanced $1.125 to $120.05. May Feeder cattle rallied 67.5 cents to $145.475. Prices were mixed in early trading but turned higher and closed with modest gains. Futures were pressured in early trading by disappointing cold storage data on Monday that suggested slower beef demand. USDA reported frozen beef inventories dropped 8.46 million lbs. during February, which fell well short of the average 27.2 million-lb. drawdown over the period. Stocks of 510.90 million lbs. were a record, including record boneless beef supplies. However, prices rebounded as boxed beef was higher at midday on good demand for moderate offerings. Choice was $2.28 higher at $233.23 and Select gained $2.71 to $225.76. Sales nearly doubled Monday’s midday business.