After the Bell: New Highs Soybeans, Meal and Corn on Weather, Demand Speculation

Posted on Wed, 12/23/2020 - 14:35

Corn: March corn futures prices closed up 3 3/4 cents at $4.47 1/4 today and hit another contract high and a 1.5-year high for the most-active contract. The corn market bulls are snorting and on a run. Charts are bullish, which continues to invite speculators to the long side of corn. USDA’s final 2020-crop production estimates and updated global supply and demand forecasts are three weeks away and bulls see any market weakness as buying opportunities. Generally dry weather in South American growing regions remains a bullish element for corn futures.  Corn sales in the week ended Dec. 17 fell 59% below the prior four-week average to 651,100 MT, with no large new sales announced to China, but prices rallied to new highs this morning. That is a sign that traders expected better demand or prices have yet to reach levels that will curtail use. Chinese corn futures rose almost a dime Wednesday, to $10.33 a bushel.  

Soybeans: March soybeans closed up 10 cents today to $12.60. March soybean meal futures gained $4.70 at $419.00 and March bean oil rose 65 points to 40.61 cents. All three markets closed nearer their daily highs and set new contract highs today. The charts for soybeans, meal and bean oil are in bull modes, inviting new fund money on the long side, especially with the U.S. dollar back on the defensive at mid-week. The soybean market remains supported by the record U.S. crush pace, sustained export shipments and record sales already on the books.The Argentine port and crush strikes continued for a 14th day with limited progress scored between the unions and owners on wage demands. The labor strike will likely persist through the Christmas weekend with more than 110 vessels waiting to load farm goods.

Wheat: March SRW futures rose 12 3/4 cents to $6.29 3/4. March HRW gained 8 3/4 cents to $5.88 and March spring wheat rallied 8 3/4 cents to $5.80 1/4. SRW futures rose to two-month high but HRW wheat surged to the highest for the nearby futures since August 2018. The uncertainty about supply from Russia amid the new export quotas and export taxes and further gains in soybeans and corn turned wheat prices higher after trading lower most of the overnight session. Sentiment now is the market should rise to levels that would be just below the Russian quotes with the new taxes factored into values. Paris wheat futures closed at the highest since Oct. 4 on worries about tightening supplies on active export sales. Any sustained price rally in European wheat will lead U.S. values higher.

Cotton: March cotton prices rose 1.32 cents to close at 76.14 cents. Futures clawed back more of the deep losses sustained Monday on strength in the weekly export sales reports, rising global stock markets and a weaker U.S. dollar. USDA issued an exceptionally strong weekly export sales report 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.

Hogs: February lean hog futures prices closed up $1.825 at $67.85 today. Prices closed near the session high and hit a three-week high today. Lean hog futures found support today from USDA’s weekly export sales report showing U.S. sales for 2020 light, but shipments continued strong, up 2% from the prior four-week average. Mexico and China took the bulk of the shipments. Sales for 2021 were 23,400 MT with China buying 7,700 MT. Some additional support today came from USDA reporting Tuesday pork in freezer storage fell to the lowest since August 2010 and were the tightest November inventory in 23 years.  

Cattle: February cattle were up $1.275 to $114.725 and April gained $1.05 to $118.70. March feeders were up 7.5 cents to $141.95. Cattle futures rejected early weakness and closed higher following the stronger cash markets. USDA’s Cattle on Feed Report last Friday offered no surprises but did indicate supplies will be peaking in the first quarter. The industry is turning the corner and 2021 will see smaller packer margins than the 2020 records and an improvement in leverage for cattle feeders as supplies tighten. That is reflected in some deferred futures hitting new highs. Direct cash cattle trades were reported in Texas and Kansas at $110. That’s $2 higher than last week’s weighted averages.