After the Bell: Corn, Soy Extended Weekly Rallies on China Demand, South America Weather Uncertainty

Posted on Fri, 11/20/2020 - 14:47

Corn: March corn futures rose a penny today to close at $2.28 1/4 and for the week rose 8 3/4 cents. The corn market remains resilient, with bulls next week hoping to challenge longer-term price resistance at the $4.40 area. USDA Friday morning announced two daily corn sales. Private exporters sold 158,270 MT to Mexico and 131,000 MT to unknown destinations, both for delivery this marketing year. The market should remain supported next week by strong demand and drier Brazilian weather forecasts for corn areas over the next 10 days. Worrisome for corn market bulls is that ethanol production has declined amid rising Covid-19 infections and a downturn in gasoline demand.  Still, overall U.S. corn sales this marketing year are equal to 52% of USDA’s annual forecast, compared with 40% on average. Corn prices in China remain near $10 per bushel and traders continue to speculate the government will soon announce larger import quotas.

Soybeans: January beans gained 3 ½ cents to $11.81 on Friday, up 33 cents this week. Prices finished almost 16 cents below new contract high at $11.96 ¾ touched this morning. January meal rose 20 cents to $392.50 and up $4.70 this week. January soyoil rose 1.38 cents this week to 38.34 cents. Spot soybean futures settled lower just once since November 6 as traders monitor elevated weather risks in South America amid strong demand in China. Prices are up $1.25 a bu. this month. Profit taking ahead of the Thanksgiving holiday week trimmed earlier gains today as traders grew nervous at these elevated price levels, fearing that forecast models could flip while the markets are closed over the weekend.    The failure of the soymeal market to make new highs this week with soybeans is a possible warning signal the rally may be getting near exhaustion.  

Wheat: March soft red winter wheat futures ended the day Friday up 3/4 cent at $5.99 1/2 and for the week lost 2 1/2 cents. March hard red winter wheat futures closed up 2 1/4 cents at $5.59 1/4 and for the week lost 1 1/4 cents. Once again, this week proved the wheat markets are resilient. Prices Friday saw slight support on unwinding of spreads against long corn and soybean positions. U.S. winter crops are establishing well in the Midwest and in parts of the central Plains. Rain this weekend and next week will be extremely important to parts of the southwestern and west-central high Plains. U.S. exports are slow amid high prices and a lack of exporter space to ship wheat. However, China is buying. Rising Covid-19 infections are boosting importer buying of world supplies. Weather in the Northern Hemisphere has been dry, but rain and snow is forecast into early December.

Cotton: March cotton extended this week’s gains to the highest since Oct. 28. March cotton rose 129 points on Friday to 72.96 cents and up 256 points this week. The cotton market was able to move past sluggish weekly export sales on Thursday to finish at three-week highs. In addition, the constant talk of rising COVID-19 infections in the U.S., as well as Europe, appears to have been overtaken by optimism for a vaccine to be in use by year end and lead to a recovery in consumer spending in early 2021. Futures remain in a steep, bullish seven-month uptrend. Prices are usually looking to establish a harvest low during Thanksgiving week. It is possible prices may be forming a secondary top when prices are usually bottoming.  

Cattle: Cattle rebounded sharply from earlier weakness to close mixed to mostly higher. February cattle rose 12.5 cents on Friday to $110.65 but down $1.575 for the week. January feeder cattle fell 95 cents to $134.60 and down $3.275 for the week. Calm replaced fear today with better domestic and export demand offsetting worries about rising Covid-19 infections leading to slaughter plant slowdowns. USDA estimated this week’s kill was 665,000 head, up 12,000 head from last week and 3,000 head below a year ago. There may be some slowdowns from the pandemic, but packers have put in place safety gear and procedures to minimize major reductions. Direct cash cattle trade was slow Friday, but trades completed were $1 to $2 weaker from earlier this week. Midday boxed beef was mixed on light demand for light offerings.  Choice gained 80 cents but Select cutout fell 12 cents. Stronger cash markets are needed to support futures next week.  

Hogs: February lean hog futures rose $2.30 to close at $65.35 after hitting a 2.5-month low in early trading. Prices also scored a technically bullish “outside day” up on the daily bar chart Friday. For the week, February hogs gained 77.5 cents. Friday’s solid rebound will have to be followed by more price strength next week to stop the near-term downtrend in lean hog futures. The market was hit Thursday by rumors of processing disruptions that sent futures tumbling. Prices were able to quickly rebound Friday as USDA estimates did not reflect any downturn in hog slaughter this week. The noon pork cutout value Friday did dip 90 cents on weakness in hams, but movement was decent at 229.11 loads. Threats of Covid-19 plant shutdowns also will limit the upside in hogs in the coming weeks.