After the Bell: Wheat Jumps on Dry Weather Concerns, Corn Slips Lower

Posted on Wed, 05/20/2020 - 15:37

Corn: Corn futures finished steady to 1 3/4 cents lower through the March 2021 contract amid bear spreading. Some far-deferred months posted fractional gains. The wheat and soybean markets tried to pull corn futures higher today, but there wasn’t any sustained buying above unchanged. Corn remains the weakest of the three markets fundamentally, saddled with plentiful old-crop supplies and an outlook for a surge in new-crop ending stocks. While price action over the past month signals much of the negative fundamental news has been factored into the market, corn doesn’t have a reason to rally. The one “reason” corn could rally is that funds are heavily short the market.  

Soybeans: Prices closed higher and near midrange. July rose 4 1/2 cents to $8.46 3/4 with November up 3 3/4 cents to $8.54. July Meal rose 90 cents to $285.50 with July soyoil up 27 points to 27.36 cents.The market rose on support from strong crude oil prices lifting potential biofuel demand and strong U.S. and world stock markets on economic recovery optimism. The lack of any new Chinese sales confirmations in the daily USDA export sales report this morning capped overnight gains. However, Chinese soybean crush rates continue to expand as large Brazilian arrivals become available to crushers. Last week’s soybean crush was estimated at the highest in 11 weeks. Weekly soybean meal disappearance remains strong, but not keeping pace with rising production. Crush rates are expected to remain elevated. More sales to China could give the markets a pop.

Wheat: Prices opened lower and posted strong gains with July HRW futures forming a key reversal up---a sign prices may have made an early seasonal low. July SRW rose 15 cents to $5.13 3/4 and July HRW gained 11 1/2 cents to $4.59 ¾. Prices were supported by both short-covering and bargain buying amid upside leadership in from stronger Paris and Black Sea futures this morning. Paris wheat jumped to a four-day high and July Black Sea futures are trading at the highest since April 28. Black Sea wheat prices are rising on speculation that the Russian government will exert more control on wheat exports following the end of the current quota system in June. Record-high flour and interior wheat prices could slow early-season Russian wheat exports until their domestic flour market begins to fall back from record highs.  

Cotton: July cotton futures prices closed down 99 points at 58.21 cents, after hitting a two-month high on Tuesday. December cotton futures closed down 38 points at 58.79 cents. News the U.S. Senate on Wednesday moved to de-list Chinese companies from U.S. stock exchanges amid souring U.S.-China relations was unsettling to the cotton market today. Still, cotton prices have been trending higher for the past seven weeks, mirroring the strong rebound in the U.S. stock indexes. The solid rally in crude oil prices recently is also a positive for the cotton market.

Hogs: June lean hog futures closed up $0.225 at $56.875 today after hitting a three-week low early on, while July futures fell $0.475 at $55.80. The nearby June hog futures saw some support today as cash hog bids climbed an average of $1.34 on Tuesday, with packer processing picking up. However, the CME hog index was down $1.10 at $67.60.  Hog slaughter so far this week is up 85,000 head from a week ago but still more than 200,000 head below year-ago levels. The recent processing disruptions mean market-ready hog supplies are plentiful, despite the culling of some herds. The pork cutout value gained $7.02 at midday Wednesday, led by a gain of over $28.00 in hams, on movement of 184.14 loads.  

Cattle: Live cattle futures have consolidated over the past week, with nearby live cattle futures unable to sustain buying above $100. Today, the market settled 17 ½ cents lower in the front month and down $1.05 to $1.425 in deferred contracts. Feeder cattle posted heavier losses of $1.35 to $3.125, as the move below last week’s low triggered some technical selling.  Cattle processing has recovered more rapidly than many expected. Wednesday’s kill was estimated at 101,000 head, a 10,000-head improvement from last week and “just” 20,000 head under year-ago levels. Bigger weekend kills are expected to help work through backlogged supplies in the weeks ahead.