After the Bell: Corn Ends Week Higher on Crop Production Uncertainty; Beans Slump

Posted on 07/05/2019 2:08 PM

Corn:  Prices ended higher and near session and weekly highs.  September corn rose 2 cents to $4.38 3/4 and December futures rose 1 cent to $4.42 ¼. Prices closed higher after testing key support earlier this week. Prices rebounded from early weakness amid uncertainty about the weather. A weak cold front next week will bring some rains but some forecasters see a hot, dry pattern developing into late July that may hurt some pollinating corn. Next week’s action will be dominated by updated weather forecasts. Prices opened lower on poor exports and that may continue to be a cap on rallies. Corn export sales for combined old- and new-crop delivery totaled 331,900 metric tons (MT) for the week ended June 27, below trade forecasts. The Brazilian winter corn harvest reached 35% complete with strong yields reported. The safrinha harvest pace is 15% ahead of the 5-year average of 20% and means more supplies will be quickly filling ports for more aggressive exports. 
The U.S. Environmental Protection Agency (EPA) said on Friday it has proposed increasing the volume of biofuels refiners must blend into their fuel annually to 20.04 billion gallons in 2020, up from 19.92 billion gallons in 2019.The proposed mandate included 15 billion gallons of conventional biofuels like ethanol, unchanged from 2019, along with a biodiesel mandate of 2.43 billion gallons for 2021, unchanged from 2020. On July 11, USDA releases its monthly World Agricultural Supply and Demand Report and it will incorporate the new acreage estimate from June 28 into its new-crop corn balance sheet. Assuming there’s no change to yield, that would add about 200 million bu. of supplies to the new-crop balance sheet and push ending stocks up over 1.8 billion bushels.

Soybeans: Nearby soybean futures closed down 11 to 14 ¼ cents and near their weekly lows. August beans fell 13 ¾ cents to $8.76 with November falling 14 ¼ cents to $8/94 ½. Soybean meal and soybean oil futures also fell to close near weekly lows on Friday. Strong export sales report failed to support the market amid worries about the outlook for Chinese sales on the books and if they will get shipped amid concerns about the trade war with China, African swine fever outbreak on Chinese import demand. Weekly export sales of soybeans for both marketing years came in at 1.029 million metric tons (MMT), near the high end of analysts' forecasts that ranged from 600,000 MT to 1.2 MMT. The total included 607,300 MT to China for the current marketing year. US weather has potential for heat returning to the Midwest in the 10-to 14-day period. The ridge that is now centered in the west can stretch east bringing warmer temps to the delta, southeast and possibly the western belt. No extreme heat is expected, but the market will monitor this progression  Next data release will be the July monthly supply and demand report on July 11. WASDE will use the NASS June acreage numbers which cut 4.6 million acres of soybeans if WASDE uses the NASS June acre estimates. U.S. weather and yield will drive the market, and thru the 10-day period conditions should improve. The wild card is the funds willingness to increase short positions.

Wheat:  Wheat prices followed corn higher, with September SRW futures rising 1 cent on Friday to $5.15 and September HRW futures gaining 1 1/2  to $4.45 1/2. September spring wheat 6 ¾ to $5.33 ¼. Spot basis bids for hard red winter wheat were steady to weaker today with harvest expected to be active with light demand for exports. Farmers sales remain slow. Protein premiums for wheat delivered by rail to Kansas City fell by 9 cents per bushel for wheat with protein content of 11.4% and dropped by 14 cents per bushel for 11.6% protein wheat. Premiums were up 7 cents for 11.2% protein wheat. A sign of better quality crops. Harvest pressure may continue another week with warm, dry weather. USDA said weekly export sales of wheat totaled 276,500 metric tons (MT), near the low end of forecasts that ranged from 250,000 to 550,000 MT.  FranceAgriMer’s “good” to “excellent” rating for the French soft wheat crop plunged 5 points from week-ago to 75%. A record-setting heat wave has clipped the crop. But this is still two points ahead of last year at this time. Ukraine’s wheat crop will likely surge 16.9% this season to 28.8 MMT, forecasts the French consultancy Agritel. After touring fields June 17-21, Agritel said it expects favorable weather to result in record yields. This crop peg would top the five-year average by nearly 12%. The consultancy projects Ukraine will export 19.5 MMT of the grain in 2019-20.

Cotton: December cotton futures closed down 43 points today and finished near the session low.  Prices did close higher for the week and held above support at the 20-day moving average For the past six weeks, prices have been chopping in a sideways pattern at lower levels on the daily bar chart.  The weekly export sales report was neutral with old-crop sales almost doubling a week earlier total with China a small buyer. Shipments rose 6% in the week ended June 27 with India, Vietnam and Turkey the top three destination for U.S. cotton last week.  Traders were hopeful for better sales and more shipments to China last week. The July 11 USDA WASDE report may show an increase in old-crop carryover from a small cut in exports.  

Hogs:  Futures ended lower on Friday and mixed for the week. August hogs fell $1.325 to $77.05 but up slightly for the week.  December fell $2.65 to $70.00 and down this week. The market continued under pressure after failing to build on early-week gains and stronger cattle. Even the fresh pork market today was slightly stronger at midday on modest sales. Today’s weekly export sales report showed pork sales in week ended June 27 fell 21% from week-ago and 11% below the four-week average and it did not include any big sales to China. Shipments did rise 10% above the four-week average with China taking 30% of the total and Mexico taking almost 29%. Since Jan 1, shipments are up 8.8% from a year ago and outstanding sales not yet shipped were up 96%. The markets continue to want to more and much larger new business with China. Slaughter remains burdensome and the biggest negative for the market. Average hog weights in the key Iowa/southern Minnesota market dropped 1.4 lbs. during the week ending June 29, but weights were still up a dramatic 4.7 lbs. from year-ago levels. This further highlights the abundant supplies.

Cattle: Live August live and feeder cattle futures rose for a second week. August live cattle gained $1.55 to close at $107.00 the highest weekly settlement for the contract since May 24. August feeder cattle gained $2.25 to $138. 825. Look for prices to begin next week with a firm undertone. Packers paid $1 to $2 higher for cattle on Wednesday in the North where supplies are tighter providing a firm tone to the futures at the opening this morning. The new front-month August contract is several bucks under the cash market. The midday beef trade was weak with Choice down $1.09 and Select sliding 21 cents on moderate sales. In the week ended June 27, beef export sales rose 24% from a week earlier and up 13% from the prior four-week average. Shipments also rose 6% in the latest reporting week.  The wide spread between choice and Select boxed beef values points to current marketings, and packers are enjoying wide profit margins. This could work to feedlots’ advantage next week.  USDA said steer carcass weights rose 5 lbs. in the week ended June 22, but that is still 6 pounds below the five-year average.

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