After the Bell: Corn, Soy Retreat Ahead of USDA Reports, Weather Change

Posted on 06/26/2019 3:36 PM

Corn: Nearby corn futures closed down 3 1/4 to 4 1/2 cents today and near mid-ranges. The corn market is essentially treading water this week, ahead of what is one of most important USDA report days of the year: Friday’s USDA acreage and grain stocks data. The average of trade estimates for June 1 stocks in all positions is 5.332 billion bu. versus last year’s June stocks of 5.305 billion bushels. The average guess for U.S. corn acreage is 86.662 million acres, which compares with March intentions of 92.792 million and the June WASDE of 89.800 million acres.Midwest weather has turned warmer and slightly drier. Normal temperatures and rainfall should continue through the two-week period. This will increase growing degree units and the market is looking for the crop to respond favorably. But this delayed crop will need very favorable growing conditions through October to salvage yield potential this year. Traders will closely examine Thursday morning’s weekly USDA export sales report, which is expected to show 2018-19 corn sales of 150,000 to 450,000 MT and 2019-20 sales of 100,000 to 300,000 MT.

Soybeans: Soybean futures finished low-range with losses of 7 to 9 cents in most contracts. Soymeal futures dropped $2.30 to $2.50, while soyoil futures fell 15 to 18 points. sis: Soybean futures were pressured by profit-taking today as traders continued to position themselves ahead of USDA’s Acreage and Grain Stocks Reports on Friday. While funds are still net short soybean futures, there doesn’t seem to be any urgency to completely cover those positions. Unless that changes, the market could face followthrough selling Thursday. But we don’t expect funds to add many new short positions ahead of the reports. Weekly export sales data may give the market a little price direction, though it’s unlikely there will be anything in the report to greatly move the market. Traders expect soybean sales between 200,000 and 500,000 MT for 2018-19 and between 100,000 and 300,000 MT for 2019-20.  

Wheat: Wheat futures faced pressure early on, but the market strengthened as the day progressed. SRW wheat futures were the leaders to the upside and finished with gains of 4 ½ to 8 cents. HRW wheat settled 2 ¾ to 3 ¾ cents higher and HRS wheat futures posted gains of 1 ¾ to 4 ¼ cents. Wheat futures got a boost from Statistics Canada’s report showing producers will likely plant around 24.6 million acres to wheat in 2019, which was roughly 1.1 million acres less than they signaled during April and 1.1 million acres lighter than anticipated. This would put planted acres under year-ago levels. A drop in durum plantings led the decline. Warm and dry near-term forecasts for France Germany, Russia and Ukraine also provides some support to the wheat market today. On the other hand, warmer temperatures and a break from the rains over the next 10 days should help winter wheat harvest to advance in the United States.  

Cotton:  Cotton prices rose to a six-session high but closed midrange. December cotton closed at 66.39 cents, up 67 points for the day. The market was supported by short covering, a strong oil market and talk about increased export sales in Thursday’s weekly USDA report. U.S. President Donald Trump said on Wednesday it was "absolutely possible" he would emerge from a meeting with Chinese leader Xi Jinping with a deal that would keep him from imposing tariffs he had threatened to put on China. Trump is expected to meet with Xi at the G20 summit in Japan this weekend. It will be the first time the two leaders have had a face-to-face meeting since trade talks between their countries collapsed in May. Still, he also left open the possibility of imposing additional tariffs on China if no agreement was reached.  Shorts are willing to exit in case there is a new deal and China end up shipping all the old-crops sales on the books and begins buying for 2019-20 season. Traders are also positioning ahead of the USDA Acreage Report on Friday morning. Traders surveyed by Reuters expected farmers planted slightly more than they indicated in March. The average trade projection of analysis surveyed showed 13.819 million acres, up from 13.78 million estimated in March but still down from 14.099 million sown a year ago.

Hogs: Hog futures closed lower but above the opens. August futures declined 70 cents to $75.475 and December fell 10 cents to $69.475. Prices tried to rebound but the continued large slaughter rate weighed on buying interest in futures and pressured fresh pork values. The pork cutout value fell 95 cents at midday today on most cuts except hams and picnics. Sales were sluggish. Slaughter the first three days of this week is down 22,000 head from a week ago but still up 66,000 head from a year ago. Buying was also curtailed ahead of USDA’s Quarterly Hogs and Pigs report on Thursday after the close. Analysts surveyed by Reuters expect the report to show all hogs and pigs as of June up 3.0% on average from year-ago levels, but that figure could come in even higher based on recent slaughter numbers. President Donald Trump s says China knows what the U.S. must have for a trade deal. Trump told Fox Business Network that he would do additional tariffs if there is no trade deal, but a deal could be reached this weekend at the G20 meetings in Japan to avoid the need for further tariffs.   

Cattle: August live cattle futures closed up $2.075 today, while the October contract gained $1.825. August feeder cattle futures closed locked up the $4.50 daily trading limit today. Heavy short covering in the cattle futures was featured today, along with some perceived bargain-basement buying after prices recently hit contract lows. Many cattle market watchers see third-quarter cattle futures as “cheap” relative to expected beef supply. The cash cattle market continues to hunt for a summer low, though August futures are ahead of cash and now under seasonal lows that were scored in the last two years. Cash markets are generally quiet at mid-week, with better trading interest will surface later today or Thursday. Some light cash cattle trade took place in Iowa/Minnesota Tuesday at $108, down from purchases between $110 and $115 in the region last week. And Nebraska saw a few sales in the dressed market at $180, steady with week ago. Beef cutout values were up 59 cents on Choice and up 21 cents on Select on sales of 86 loads at midday.


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