After the Bell: Corn, Beans Extend New Highs on Demand, Weather Uncertainty in South America

Posted on Thu, 12/24/2020 - 13:17

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Corn: March corn rose 3 3/4 cents to close at $4.51, up 13 ½ cents this week. Prices touched the highest since July 2019. Corn futures rallied despite a shift to wetter weather in Argentina next week on firming cash basis amid fresh rumors of Chinese demand for U.S. corn for May. Large Gulf discounts to other world corn exporter offers may help to attract stronger business after Jan. 1 after the latest weekly USDA data showed sales plunged to a new marketing year low. Much attention will remain on the status of the Argentina labor strike that entered its third week today. As the commodity markets end 2020, the focus is on world’s strong demand, especially China and the impact of South America’s weather on the size of next year’s global supplies.  

Soybeans: March soybeans rose 4 1/2 cents to $12.64 1/2, capping a 40-cent gain for the week. March soymeal was down $4.90 on Friday to $414.10, paring this week’s gain to $8.80. March soyoil rose 52 points to 41.13 cents and up 1.46 cents this week. Soybeans and products remain supported by concerns the Argentina port strike will last longer, boosting demand for U.S. soy products and domestic processor demand for beans. There is talk of some buyers of Argentine meal trying to buy into the U.S. Gulf lineup for quick shipments because of the Argentine shipping delays. The weather forecasts still have decent rains for 90% of the Brazilian bean areas over the next week, and rains over 75% of Argentina, with the model runs ever so slightly less wet for Argentina this morning. Actual amounts and coverage will set the tone for trading next week.  

Wheat: March soft red winter wheat futures closed the day down 2 3/4 cents at $6.27 and for the week rose 18 3/4 cents. March hard red winter wheat futures gained 4 cents today to close at $5.92—a contract high close. For the week, March HRW gained 19 3/4 cents. It was a very good holiday-shortened trading week for the market bulls, suggesting follow-through technical buying and new for-the-move highs are in the cards for price action next week. Solid gains and new contract highs in corn and soybean futures this week have helped pull the wheat futures markets higher and wheat will likely continue to take its cue for corn and soybeans.The weather uncertainties will continue to provide a floor under prices in the near term.  

Cotton: March cotton futures closed the day up 6 points at 76.20 cents, for a technically bullish weekly high close. However, on the week the market still lost 96 points. Not a bad week for the cotton bulls, following Monday’s sharp losses, with over half of those losses regained by the close today. USDA on Wednesday reported very strong weekly export sales for the week ended Dec. 17 that showed net sales of 416,700 bales, up 14% from the prior four-week average. China bought 185,600 bales but business with Vietnam and Pakistan were also strong.  Shipments last week rose to 281,200, up 12% from a week earlier and 20% higher than the four-week average. The strong sales have cotton bulls reckoning more of the same could occur in the coming weeks.

Hogs: Futures ended mixed Thursday but higher this week. February futures fell 90 cents on Thursday to $66.95, paring the weekly gain to $1.15. April futures slipped 20 cents to 71.70 but still up $1.175 this week. Several deferred contracts hit new contract highs this week. Yesterday’s USDA Hogs & Pigs Report was neutral to supportive as market hog and breeding inventories fell short of expectations. Much of this is due to major revisions that NASS made to inventory and pig crop estimates from March 2019 through September 2020. The Dec. 1 market hog inventory came in at 71.2 million head, down 0.7% from a year ago. But it is worth noting that NASS revised the December 2019 inventory lower by 820,000 head.  Producers told NASS that they intend to farrow 3.118 million sows in the Dec.-Feb. quarter, or a 50,000 head increase over last year. If confirmed, it would be the largest farrowing total for the quarter since 1980 – even as the breeding herd shrank 3%.  

Cattle: February live cattle futures closed the day up $0.25 at $114.975 and scored a technically bullish weekly high close. For the week, February live cattle gained $0.125. January feeder cattle futures rose $0.65 today to close at $140.925, also a bullish weekly high close and for the week rose $0.475. After Wednesday’s strong rally, live cattle futures saw a quieter consolidation session today, ahead of the Christmas holiday. Today’s technically bullish weekly high closes in live and feeder cattle futures set the table for some follow-through chart-based buying early next week. Direct cash cattle traded $2 higher this week.  However, renewed weakness in wholesale beef prices this week may derail further cash market strength next week