After the Bell: Corn, Soybeans Hit New Highs on Demand, Drier South American Forecast

Posted on Mon, 11/23/2020 - 14:42

Corn: Corn futures settled 3 ¼ to 5 ¾ cents higher through the September contract, which was in the upper half of today’s daily trading range but well off session highs. Corn futures got a lift overnight from customs data showing China imported an impressive 1.14 MMT of corn during October, a dramatic year-over-year increase that pushed China’s total corn imports to 7.82 MMT, with two months remaining in the calendar year. This tops Beijing’s official 7.2 MMT low tariff rate quota for 2020, reminding of the country’s need for feed imports as it rebuilds its hog herd and is facing a domestic supply shortfall. USDA this morning announced a 334,000 MT daily corn sale to unknown destinations, which could confirm rumors last week China was shopping for corn. Weekly corn export inspections of 832,637 MT were within expectations and little changed from the week prior.  

Soybeans: January soybeans futures closed up 10 1/2 cents at $11.91 1/2 after hitting a contract high earlier today. March soybean meal futures also hit a contract high and closed up $2.60 at $392.80.  March bean oil hit a contract high today and closed up 22 points at 38.21 cents. The soybean, oil and meal futures markets got support today from weekend rains in South America that were lighter than expected, with the next rain event pushed back later in the 6- to 10-day forecast period. Brazil soybeans are 74% planted versus 76% average but southern areas are well behind average pace. Current USDA estimates for Brazil and Argentina soybean production are 133 MMT and 51 MMT, respectively. Private estimates can be found under these numbers, but it is getting harder to argue higher. There were no new daily USDA soybean sales announcements this morning.  

Wheat:  Wheat futures end higher but in the bottom half of today’s ranges. March wheat rose 5 cents to $6.04 ½, and March HRW gained 1 ¼ cents to $5.60 ½. Spring wheat was fractionally lower. Wheat futures gave back some of this morning’s gains by the close, following profit taking in corn. Wheat futures finished lower last week despite gains in corn and soybeans.  Australia wheat is the cheapest origin as good harvest pace continues. Questions are circulating about whether China will buy U.S. wheat given the current diplomatic spat between China and Australia. China’s wheat TRQ is at 9.36 MMT, and the latest government customs update shows China has imported 6.69 MMT of wheat with two months remaining in the calendar year. That’s up 163.6% from year-ago.

Cotton: March cotton futures closed up 84 points at 73.80 today and hit a 21-month high. The cotton market was boosted today by more good news on the Covid-19 vaccine front and some upbeat U.S. economic data. AstraZeneca and Oxford University released results of their Covid vaccine trial that were almost as good as the two released the past couple weeks, with all three being above 90% effective. Meantime, Monday’s U.S. flash Markit composite purchasing managers index (PMI) for November came in at a better-than-expected 57.9 versus 56.3 in October. A reading above 50.0 suggests expansion. The business and manufacturing PMI’s also beat market expectations. Deliverable cotton stocks are the highest since March of 2019 as delivery for December futures began Monday, which came in at 116 contracts with Term Commodities putting them out.  

Hogs:  Futures end higher but down from earlier session highs, extending Friday’s strong recoveries. December hogs rose 82.5 cents to $64.95 and February gained $1.775 to $67.125. After a strong recovery Friday, shorts wanted out of positions and speculators were eager to get long after a third positive Covid-19 vaccine trial was announced overnight.  Slaughter rose to 497,000 head today, up 20,000 head from a week ago and 4,000 head more than a year ago, easing fears about the rising virus infections that may curb slaughter operations. Pork cutout values were firm at midday, rising 78 cents to $78.95 on active sales   Cash hogs were lower at midday with moderate negotiated numbers. Look for big runs early this week ahead of the Thanksgiving holiday on Thursday holiday. The national daily direct hogs were $1.02 lower.

Cattle:  Futures surged sharply higher, building on Friday’s turnaround. February cattle rose $2.25 to $112.90 and March feeders were up $2.90 to $137.275. The second-largest cattle slaughter last week since social distancing began, a friendly USDA Cattle-on-Feed report, and the announcement of a third successful COVID-19 vaccine all supported cattle futures today.  Slaughter was up 3,000 head last week, easing fears about Covid-19 shutdowns that triggered much of last week’s selloff. Friday’s USDA Cattle on Feed reports showed cattle placed in feedyards last month fell more than expected, resulting in a lower number of animals on feed than traders were expecting on Nov. 1. Placements last month were the lowest in four years.  The long-term outlook for cattle prices is certainly much more positive for the second half of 2021, based just on expected cattle supply.