After the Bell: Corn Hold Support and Bounces, Beans, Wheat Decline on Better Weather

Posted on 07/02/2019 2:55 PM


Corn: Corn futures settled high-range with gains of 2 1/2 to 3 1/2 cents in the September through July 2020 contracts.  Corn futures bounced amid light corrective buying today as seller interest was limited around Monday’s lows. Fundamental support came from Monday’s steady crop condition ratings, whereas traders anticipated a slight improvement. But given the delayed maturity of this year’s crop and extreme uncertainty with planted acreage and yield potential, crop condition ratings aren’t likely to be market-moving – unless there’s a dramatic improvement or decline.Wednesday’s session will feature pre-holiday positioning. For some, it will mark the last trading day of the week even though markets are open Friday. Expected lower volume could lead to a quiet session – or increased volatility. Markets typically extend the current trend or reverse course coming out of the Fourth of July, so it’s unlikely traders will want to add many new positions ahead of the holiday.  

Soybeans: Soybean prices ended down 7 to 10 cents today, with products also declining. August soybeans fell 10 cents to $8.79 ¾, while November declined 9 ¾ cents to $8.98 ¾.  Soybean futures struggled with favorable Midwest weather and perceptions that many crops are getting better after yesterday’s report failed to show an expected rise in crop conditions. Funds were light sellers Tuesday, exiting some longs established last week after prices failed to rally on yesterday’s conditions report. Soybean planting advanced to 92% complete as of June 30, which was a seven-point advance over the past week but still seven points behind the average pace, according to USDA data. Emergence is also concerning, with just 83% of the crop out of the ground as of Sunday, which is 12 percentage points behind the five-year average for this date. USDA estimated about 54% of the crop was rated “good” to “excellent,” unchanged from week-ago. Traders had expected recent warmer, drier weather to lift ratings by two percentage points. But instead, the amount of crop rated “poor” to “very poor” climbed a percentage point to 11%.Brazilian exports of soybeans are really starting to slow, which is causing exporters to become more aggressive with offers. With the outbreak of African swine fever in China, feed demand has slowed, and China government reserve stocks are filled. USDA may need to cut its estimates for China soybean imports by 2 to 3 million metric tons from the 85 million forecast in June because of the slowing demand.  

Wheat: Winter wheat futures continued their steep price slide today, losing 8 3/4 to 11 3/4 cents and hitting multi-week lows. Spring wheat futures closed 7 to 13 cents lower. Dry weather is advancing U.S. wheat harvest progress, with some better yields reported. U.S. winter wheat harvested was 30% completed on June 30, up from 15% a week earlier but behind the five-year average of 48%.  The winter wheat crop was rated 63% “good” to “excellent” condition, above trade estimates for unchanged conditions at 61%. The fresh supplies are weighing heavily on cash and futures. Also, rains are helping both U.S. and Canadian spring wheat crop development.The speculative fund traders are also presently bailing out of their previously established long futures positions, to throw some more gasoline on the bearish fire.

Cotton: Futures rose and closed in the upper third of the daily price range. December cotton rose 70 points to 67.28 cents. The U.S. and China agreed on Saturday to restart trade talks after President Donald Trump offered concessions (including no new tariffs) to reduce tensions with Beijing. Traders are watching for improved pork sales to China, after White House trade advisor Peter Navarro told CNBC this morning that China promised immediate and substantial agricultural purchases. Traders will be looking for any signs that they are buying some U.S. cotton but also shipping bales already purchased.  India and Vietnam also have large supplies of purchases unshipped with the marketing year coming to an end on July 31.  

Hogs: August lean hog futures closed up 52 1/2 cents, while October hogs ended up 15 cents. Prices ended mid-range to nearer their daily lows. The hog market bulls got little traction today after White House trade advisor Peter Navarro told CNBC this morning that China has promised immediate and substantial agricultural purchases. After experiencing the vacillating rhetoric from both the U.S. and China in recent months, market watchers need to see “the proof in the pudding.” The national average cash hog price fell 1 cent on Monday. Today’s pork cutout rose 23 cents, with gains in ribs hams and bellies. Movement was 210.81 loads. Slaughter Monday rose by 13,000 head from a week earlier, to 461,000.  Pork supplies are presently burdensome and expected to remain that way, barring a dramatic uptick in demand.  

Cattle: Fed cattle closed mostly lower, while feeders were higher. August live cattle were unchanged at $104.10, with August feeders rising $1.35 to $138.375. Cash cattle were lightly traded at steady to slightly higher levels, but the test was insignificant and packers will continue to try to buy cattle lower until they can’t. Midday wholesale beef prices were higher Tuesday on strong sales, with Choice gaining 53 cents and Select rising 92 cents.  Slaughter the first two days of this holiday-shortened week rose to 243,000 head, up 1,000 head from last week and 8,000 head more than a year earlier. Packers continue to use captive supplies or animals bought in July, keeping a lid on negotiated values this week.  Cash feeder cattle traded mostly $1 to $4 higher this week at the Oklahoma City auction. Demand has improved with the drop in corn prices the past week.  


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