After the Bell: Grains, Soy Settle Mixed Ahead of USDA Report; Cattle Rally

Posted on Wed, 04/08/2020 - 15:33


Corn:  May corn futures closed down 1 1/2 cents at $3.30 today and December futures fell 1 3/4 cents at $3.49 1/4. Prices were pressured after the latest weekly U.S. ethanol data that confirmed the drastic cuts in production amid talk cash crude oil prices are near zero or, in the case of cash Canadian oil, trading negative—meaning producers are paying someone to take away supplies. Ethanol production tumbled 168,000 barrels per day to a record low 672,000 barrels per day last week. Inventories surged another 1.374 million barrels to a record 27.091 million barrels as gasoline demand fell to a record low.There have been rumors this week of China buyers shopping for U.S. corn, but USDA made no such announcements Wednesday morning, which was a disappointment.   

Soybeans:  Soybean futures saw two-sided action overnight, spent most of the day session in positive territory, but was only able to muster a midrange close, with May futures down a quarter cent and deferred contracts ½ cent to 3 ¾ cents higher. Corrective buying in the soybean market faded as the day progressed, with traders looking ahead to USDA’s Supply & Demand update that is expected to include increases to its U.S. soybean carryover estimate. Global carryover is expected to decline from March, however, in part due to smaller soybean crop estimates out of South America. While Brazilian exports of soybeans and other commodities have continued to flow (albeit with some delays) in the face of the coronavirus pandemic, Argentina has had issues getting supplies to crushers and ports.  

Wheat:  Mixed to mostly higher finishes but down from session highs. May SRW fell a penny to $5.48 1/4 and May HRW rose 4 3/4 to $4.78. Spring wheat futures gained about a nickel. Wheat rose early on weather concerns but pared the rally into the close ahead of the three-day holiday weekend. The export story is building with several nations tendering for inventories. However, tomorrow’s weekly export sales report is unlikely to show any big improvement in U.S. sales last week. Tomorrow at 11 a.m. CDT the USDA will provide its monthly global supply and demand update. Traders are not looking for the government to make many big changes to its old-crop U.S. and world carryover projections. On May 12, USDA releases its first 2020-21 balance sheets.  

Cotton: Futures extended the rally to a nine-session high. July futures rose 94 points to 53.84 cents and December gained 89 points to 55.37. Futures rose on hopes for the shelter-in-place guidelines to slowly disappear by early May and get consumers back to work and spending again. Much will depend on consumer confidence the Covid-19 disease has been beaten and people can return to normal lifestyles. The White House is developing plans to get the U.S. economy back in action that depend on testing far more Americans for the coronavirus than has been possible to date, according to Bloomberg News, citing people familiar with the matter. The effort would likely begin in smaller cities and towns in states that haven’t yet been heavily hit by the virus.  

Hogs: Lean hog futures finished 92 1/2 cents to $2.475 lower through the December contract, with most contracts ending in the lower portion of today’s range. The hog market was unable to build on gains posted earlier this week as a gap-higher open in many of the contracts failed to trigger followthrough corrective buying. Once this morning’s upside gaps were filled, fresh sellers emerged. Selling in the lead April contract was somewhat limited by its wide discount to the cash index with four trading days left and just six days until it expires. April hogs finished today $9.845 below where the cash market is projected for Thursday.  

Cattle:  April live cattle futures rose the expanded $4.50 daily limit to $92.825 today. June live cattle futures gained $1.875 to $86.675. May feeder cattle futures rose $5.575 to $119.375. Heavy short covering by speculative traders, especially the big “funds” has been featured the past two trading sessions. Cattle market traders are somewhat encouraged by reports the Covid-19 infection curve is flattening in the U.S. and Europe—even though the death toll in the U.S continues to rise. The White House is developing plans to get the U.S. economy back in action, but that depends on testing far more Americans for the coronavirus than has been possible to date. Researchers are working at full throttle to get more testing and quicker results.