After the Bell: Soybeans Close Higher but Well Below Session Highs; Corn Erases Strong Early Gains

Posted on Mon, 01/04/2021 - 14:32

Corn: March futures closed down 1/4 cent at $4.83 3/4, well below the overnight at $4.97 3/4. December fell 1/4 cent to close at $4.34 1/2, down from a session high at $4.40. Corn rallied sharply overnight with soybeans but the combination of increased farmer selling through the morning and some rains in the South America forecasts encouraged traders and funds to collect some long profits. The CFTC is expected to show fund net longs rose to the highest since the 2012 drought in a report later today. That might indicate much of the bullish news about South American weather, smaller U.S. production, record Chinese purchases and tightening global inventories is mostly factored into the rally. The Chinese ag minister said his country will increase its corn area in 2021 and said corn prices will probably fall over the next few years from current records. If they don’t fall, then there could be a further tightening of global supplies on stronger Chinese import demand.   

Soybeans: March soybean futures closed up 2 cents at $13.13 today and early on hit a contract and 6.5-year high. March meal also hit a contract high early on but then sold off to close down $5.70 at $423.70. The grain market bulls came out of the gate strong early overnight to start the new trading year, but then appeared to run out of gas as prices closed near the bottom of today’s large trading ranges. It will be important for the bulls to continue to show some power this week to keep the major bull run alive. If they can’t do that, then the big fund speculators will get very nervous and would likely start to liquidate their big long positions. March soybean futures surged more than 40 cents higher overnight, touching $13.49 1/2.  USDA inspected 1.306 MMT of soybeans for export the week ending Dec. 31. The department also added 754,646 MT to what was initially reported as inspected the week ending Dec. 24

Wheat: March soft red winter wheat futures hit a contract and six-year high today before backing off on some profit taking to close up 1 1/2 cents at $6.42. March hard red winter wheat hit a nearly two-year high today before sliding back and closing down 4 cents at $5.99 1/2. The wheat futures markets were supported in part today by big early gains in corn and soybeans, as well as the depreciating U.S. dollar on the foreign exchange market that makes U.S. wheat more competitive on the world market. Russian measures to curb its wheat shipments may curb the exportable surplus.  Moisture deficits remain for about one-third of the U.S. winter wheat crop. After the close today, some states will update crop ratings, which will set the tone for price direction this week.  

Cotton: Cotton futures kicked off 2021 in an impressive fashion, with the March contract shooting to new contract highs and coming within 10 points of the 80.00-cent level. Futures settled midrange with gains ranging from 54 to 105 points, with the July contract leading gains.  Cotton and many ag commodities ended 2020 on a strong note, which paved the way for follow-through buying to kick off 2021. Money flow is driving the impressive moves, but there is certainly fundamental backing for the rally. Traders are banking on an uptick in cotton demand as vaccination pick up around the world, helping economies to pick up steam as life eventually gets back to normal. There are also some supply concerns, with traders expecting USDA to lower its U.S. cotton crop estimate in its Jan. 12 report.

Hogs:  February hog futures rose 95 cents to $71.225 and April hogs rose $1.375 to $73.625. Futures extended last week’s rally but closed in the middle to upper 1/3 of today’s ranges. The rally was supported by fresh technical buying to start the new trading year. Cash hogs were steady to steady to firm today but supplies of barrows and gilts remain ample. The CME Lean Hog Index rose 21 cents today to $60.07, a big discount to current February futures. Futures rallies will depend on much stronger cash markets. Pork cutout values jumped $7.16 to $85.75, led by a more than $25 rise in hams. That’s a positive start on firming packer margins in January. However, sales were light and that is a concern as pork supplies will recover the next two weeks with full schedules after two holiday-shorten slaughter weeks.  But pork cutouts are strong enough to pull cash bids higher this month.  

Cattle: Live cattle futures posted losses of 82 1/2 cents to $3.00 through the December contract, led lower by the April contract. Feeder cattle futures ended $1.15 to $4.20 lower through the October contract, as March feeders paced declines.  Funds liquidated long positions to kick off the new year. Fundamental reasons for today’s sharp selloff were lacking, especially for live cattle. Feeders were initially pressured by strength in the corn market but were unable to rebound as corn turned negative intraday. Additional pressure came from sharp losses in the stock market to open the new year. Losses in live cattle and feeder cattle futures extended as support levels were violated and sell stops were triggered.