After the Bell: Choppy Trade, Consolidating Grain, Soy Rallies Ahead of USDA Reports Tuesday

Posted on Mon, 01/11/2021 - 14:21

Corn:  March corn futures closed the day down 4 cents at $4.92 1/4.  Some routine profit-taking pressure and position evening was seen today ahead of Tuesday’s USDA supply and demand reports. Most traders look for USDA to lower its estimates for U.S., Argentine and Brazilian corn production. Traders also looking for some clarity on feed demand and corn use for ethanol. Look for more active futures trading in the immediate aftermath of the 11:00 a.m. CST report’s release. The corn market was also pressured in part today by slightly wetter forecasts in South America. But after the extremely dry start to the growing season, actual rainfall will be critical this week in Argentina and in Brazil heading into the safrinha planting season next month.   

Soybeans: Soybean futures finished 2 1/4 cents lower to 1/4 cent higher through the July contract and midrange for the day. New-crop November futures finished low-range with losses of 6 3/4 cents. Soymeal futures posted gains of $5.60 to $7.20 through the July contract. Soyoil futures dropped 63 to 96 points through the July contract. Soybeans faced corrective selling today as traders positioned for Tuesday’s barrage of USDA reports. While the data is expected to be bullish, traders opted to take some money out of the long side of the market. But the rebound off session lows signals seller interest remains limited. The reaction to tomorrow’s crop reports will be telling as much of the expected bullish news is already factored into prices. A bearish reaction to bullish data could signal at least a short-term top is in place. But a bullish reaction would suggest the market is ready for another leg higher.  

Wheat: Wheat futures traded in a wide, two-sided trading range today. The markets settled in the lower half of their daily trading ranges but also well off the lows, with SRW wheat down 3 to 4 cents, HRW wheat fractionally lower and HRS wheat futures posting losses of 1 ¾ cents in most contracts. Wheat futures saw two-sided trade today, with an early rally in corn and soybeans lifting the market and a pullback during the day trading session for those markets leading to a softer trade in the wheat complex as well. Reports Russia may double its tariff on wheat exports to 50 euros per metric ton helped the market to settle well off its lows, though these reports were countered to some degree by a coinciding report the duties may not take effect until March 15 versus the initially planned Feb. 15.  

Cotton:  Futures reversed early sharp losses and closed higher with March futures up 66 points to 80.43 cents. December futures 41 points to 76.60 cents. The reversal up today underscored bullish sentiment heading into Tuesday’s USDA production and supply and demand updates.  Traders expect USDA will lower its estimate for U.S. production and carryover but raise its estimate of world production.  World consumption could increase slightly as could U.S. exports. The combination of such events may support a rally toward 83 cents.  U.S. 2020-crop production is expected to be lowered to 15.3-15.4 million bales.  A reduction below 15.2 will help scale 83 cents. World carryover is expected to be 97-98 million bales

Hogs:  February lean hog futures prices lost $0.225 today to close at $68.475, while April hogs rose $0.125 at $72.95. The futures market held up well today after hog slaughter and pork production hit records last week. Processors ramped up production after two weeks of holiday-interrupted schedules and the reopening of a Columbus Junction, Iowa pork plant after repairs. Aggressive kills helped the cash market to strengthen late last week. Follow-through buying this week would signal a seasonal low has been put in place.  Pork cutout values moved up to a seven-week high to end last week and added to that today as the noon report showed cutout up $4.13, led by solid gains in hams.  

Cattle:  February live cattle fell $1.075 to $113.40 and April fell 95 cents to $118.175. March feeders were up 7.5 cents to $136.90. Cattle futures fell today along with many other commodity and equity markets. Feeders were able to come back and close mixed after corn prices fell. The early break uncovered buying in deferred futures with those contracts closing closer to session highs or fractionally higher. Last week’s cash price averaged 25 cents cheaper than the prior week at $111.27. This week with the weaker start to futures trade, traders are looking for steady to lower cash markets. Packers are buying just enough each week to fill week-ahead kill schedules after adding to forward purchases last month, keeping market leverage in their hands.