After the Bell: Grains Bounce, Soy Weak; Livestock Rise to New Highs

Posted on Wed, 04/07/2021 - 14:38

Corn: Old-crop corn futures spent much of the day in positive territory and settled high-range and up 5 to 6 1/4 cents. New-crop futures saw two-sided action before finishing high-range and up 1 to 2 1/4 cents. Corn futures have consolidated the past few days as traders prepared for another round of USDA reports at week’s end. But the trend of the market and underlying fundamentals continue to point futures higher. The market expects USDA to cut old-crop corn carryover 106 million bu. from March, according to survey-work by Reuters, with analysts saying data would support hikes to exports, feed/residual use and ethanol grind.  Ethanol production climbed another 10,000 barrels per day to 975,000 bpd last week, reminding that demand is improving as the U.S. economy reopens. Ethanol inventories dropped 472,000 barrels to 20.642 million barrels.  

Soybeans: Soybean futures were lower, with mixed trends in meal and oil. May beans fell 10 cents to $14.08 3/4 and November futures fell 1/2 cents to $12.70 1/2.  May meal rallied $2.70 to $409.10 and May soyoil futures were down 107 to 52.85 cents. Lacking any compelling weather stories, markets remain on hold ahead of Friday’s monthly Supply & Demand Report. Few speculators want to add to long positions. Average estimates are looking for fractionally lower for soybean carryover and small cuts in South American soybean crops. Brazil’s CONAB will update its crop production forecasts tomorrow. Brazil is on track for an all-time-high soybean crop this year, although harvesting and shipments have been delayed due to rains. Consultancy Agroconsult reported Brazilian farmers will harvest an estimated 137.1 MMT of soybeans, a record volume despite weather-related challenges. Meanwhile, Brazil will likely boost soybean plantings by 1.5 million hectares (3.9%) in 2021-22, pushing planted acreage to 40 million hectares, according to a USDA attaché.  

Wheat: Wheat futures were led higher by the HRS market, which firmed 10 1/2 to 13 1/2 cents through the December contract. HRW contracts were 7 3/4 to 8 1/2 cents higher, while SRW futures closed 3/4 to 4 1/2 cents higher. HRS futures were supported by dryness concerns in the Northern Plains as spring wheat planting gets started. Spring wheat planting was a point ahead of the five-year average as of March 28, but traders are concerned not all intended acres will get planted if there isn’t relief from dryness. As of April 1, much of HRS country was covered by some form of dryness/drought, including all of top producing North Dakota. Forecasts signal dry conditions will persist across the Northern Plains for the next two weeks, with rains possible after April 20. Traders will also be watching an expected cold blast across the central U.S. early next week.  

Cotton: May cotton futures closed the day up 28 points at 79.50 cents and December futures gained 63 points at 80.04 cents. Prices closed near mid-range in the May and nearer the session high in the December. The cotton market bulls have shown some resilience recently by keeping futures trading sideways after prices slumped from late-February through March. The cotton bulls need to keep prices above very important chart support at the March lows, which keeps alive chances for a recovery in the market in the coming weeks. Look for quieter trading Thursday, ahead of Friday’s USDA supply and demand updates. Traders on average are looking for U.S. cotton ending stocks to fall to 4.11 million bales from 4.2 million forecast a month ago, according to a Bloomberg survey.

Hogs: April hogs were up 82.5 cents to $102.875 and June futures jumped $2.275 to $107.90. The rally continued with several contracts rising to new highs. Prices are following the lead of the cash markets and pork cutouts. The national price was quoted up $1.11 at midday today on aggressive packer demand. The pork cutout value jumped $3.02 at noon to $112.41, the highest since the pandemic shortages last May. Bellies continue to lead the market higher, but hams, ribs and picnics were also sold at higher prices today. Sales yesterday rose to almost 414 carloads, the most in month and today’s midday sales were active despite the price gains.  Wholesale belly prices have more than doubled since the end of 2020. The good news is the retail bacon prices have not matched the wholesale belly rally.  

Cattle: June live cattle closed up $0.65 at $125.275 today. Prices closed near the session high and hit another contract high. May feeder cattle closed up $0.90 at $152.675 today. Prices closed nearer the session high today. Cattle futures are pricing in the rally in cash and beef markets as the long-term outlook remains positive. Cash cattle trade got started at $121 in Kansas on Tuesday, with the early start hinting packers were short-bought on needs. That’s up a sharp $4 from prices last week in the state. Choice beef shot up another $2.55 at noon on Wednesday, with Select jumping $3.01. Movement was 74 loads. Today’s cattle slaughter is estimated at 120,000 head versus 119,000 head last Wednesday and 101,000 one year ago at this time.