After the Bell: Beans Lead Higher but Pare Gains Into the Close; Hogs Extend Rally

Posted on Tue, 02/23/2021 - 14:45

Corn: May corn futures closed the day up 2 cents at $5.52 1/2 and December corn closed steady at $4.69 3/4 after hitting a contract high early on today. The corn futures market remains technically strong, overall, which is keeping sellers timid. Gains today were capped after China’s May Dalian corn futures fell 12 cents to $10.96 bu. overnight. This is the last week of price discovery for 2021-crop insurance base prices and recent price action in new-crop corn futures, hitting a new high today, will entice more corn acres into the production mix this spring. Before the reopening, USDA did not announce any large daily sales, which put initial pressure on the market. However, rising inflation expectations have helped to attract new speculative buying in raw commodity markets, including the grains.    

Soybeans: May beans were up 21 cents to $14.08 1/2 and November gained 10 1/4 cents to $12.22. May soymeal rose $3.10 to $426.00 and May soyoil jumped 115 points to 48.37 cents. Soybeans were up sharply at midday before trimming a portion of the rally by the close as delays in Brazil harvest and shipments highlight supply concerns. Argentina has been through a few weeks of mostly favorable weather, but he next ten days will be very warm and dry, resulting in depleted topsoil moisture and diminished subsoil moisture--raising the need for some extremely well-timed and well-distributed rainfall in early to mid-March. World Weather anticipates at least “some” relief after March 7. Beans gained on the corn, calendar spreads were stronger, but the crush spreads were weaker. Soyoil pushed to another new round of contract highs. Much of the buying was a combination of chart-based buying and macro-economic bets/hedges on inflation.  

Wheat: Wheat futures closed mixed and above early-session lows. May SRW futures were up 1/2 cents to $6.70 1/4, May HRW futures fell 3 3/4 cents to $6.47 1/4 and May spring wheat was down 1 3/4 cents to $6.36. Prices were pressured by smaller declines in state winter wheat crop ratings than some expected. In Kansas, the top U.S. winter wheat producer, 40% of the crop was rated in “good” and “excellent” condition this week, down from 43% rated in the top categories a month earlier. Winter wheat ratings also declined in Oklahoma, but improved in South Dakota, Colorado and Montana. UkrAgroConsult pegged Ukraine’s wheat crop at 27.5 MMT, up 1 MMT tons from the previous estimate and up from 25.5 MMT last year. Warm weather in Europe is expected to abate next, bringing more normal temperatures.

Cotton: Cotton futures finished high-range with gains of 46 points in the deliverable March contract, 25 points in July cotton and 16 points in the new-crop December contract. Cotton futures continued their rally today. While there were periods of profit-taking throughout the day, bulls held the upper hand into the close. That signals there’s buyers under the market and a lack of seller interest – even on a corrective basis. December cotton futures pulled support from the strong gains in the corn and soybean markets. While both of those markets backed well off their session highs into the close, cotton is locked in a battle for acres. Last Friday, USDA projected U.S. cotton plantings will decline 90,000 acres from last year. Cotton can’t afford to lose too much acreage to corn, soybeans and other crops.

Hogs: April lean hog futures closed the day up $1.30 at $86.425 and closed at a contract high close today. June hogs gained $0.525 at $93.625 and hit a new contract high. The path of least resistance for lean hog futures prices remains to the upside, amid bullish the technical posture of the market at present.  This afternoon’s USDA cold storage update showed pork inventories rose 44 million lbs. from the end of December. The five-year average is for a 64.3 million lb. jump in frozen pork stocks between Dec. 31 and Jan. 31. Supplies were still down 26% from a year ago. Today’s noon pork report showed the cutout value was up $1.31, led by hams, on good movement of 194.22 loads. Today’s hog slaughter was estimated at 497,000 compared to 411,000 last week and 493,000 in the year-ago period.

Cattle: Live and feeder cattle futures faced pressure today and settled low-range. Live cattle settled a dime lower in the front month and 60 cents to $1.85 lower in deferred months. Feeder cattle posted losses ranging from 67 ½ cents to $1.35. February live cattle hold a modest premium to last week’s cash action, which helped to limit selling in the contract. But traders worked to narrow some of the wide premium deferred contracts hold to the cash today, with the April contract leading losses. Processing is returning to normal this week after cold weather. The storm stressed animals but also backed up marketings in Texas, which has most expecting modest cash market gains at best this week. Showlists are reportedly lower in other areas of the Plains.