After the Bell: Corn, Soy Drop After Rains Ease Threat from Hot Temperatures; Exports Remain Slow

Posted on 07/18/2019 3:01 PM

Corn:  Corn futures hit two-week lows today and lost around 11 cents in the nearbys, finishing nearer their session lows. “Rain makes grain.” Storms held together better than expected Wednesday through a wide area of Iowa and into parts of Illinois. Overnight heavy rains hit parts of Minnesota and Wisconsin. The market is so far looking past the hot temperatures today through Sunday, and much cooler temperatures on the way for next week. The market will continue to try to sort out the risks to yield potential all the way into the first widespread Midwest freezes, as well as the U.S. corn/soybean acreage mix that will be updated in the August monthly USDA report.USDA today reported net new sales of 200,000 metric tons (MT) of old-crop corn, down 21% from the four-week average. New-crop sales were more disappointing at 133,000 MT.

Soybeans:  Soybeans closed narrowly mixed but in the upper end of today’s range. August soybeans fell 1 ¼ cents to $8.81 ¼ and November dropped 1 ¼ to $8.99. Soybean meal was about 50 cents today and soybean oil futures declined 4 to 6 points. Unexpected and heavier rain this week ahead of the season’s first heat wave weighed on prices again today. The unprecedented Midwest planting problems are now in the rear-view mirror and it will take a new weather threat for funds to cover shorts or begin buying the markets. The ongoing African swine fever outbreak continues to curb soybean meal demand in China as the government estimates the herd is down about 25% from a year ago. Weekly U.S. soybean export sales also came in light last week. Old-crop sales were 127,900 metric tons MT and new-crop sales were 198,400 MT and no major Chinese purchases. China did cancel purchases of 9,853 MT of U.S. soy last week, according to Thursday's USDA data. It was China's first weekly net cancellation of soybeans since April. An additional 171,000 MT of prior sales to unknown destinations were also canceled. Unshipped U.S. soybeans sales to unknown destinations totaled 1.68 million MT as of last Thursday and there is a risk of additional cancellations with Brazil offering beans below U.S. prices through September.  

Wheat:  Wheat prices closed sharply lower and near session lows. September SRW wheat fell 12 cents to $4.93 1/2., the lowest close since the end of the May. September HRW futures were down 9 cents to $4.32 ¾. Spring wheat futures were down 2 to 3 cents. The market fell on perceptions the global wheat crop has stopped declining and U.S. wheat remains uncompetitive on the world marketplace. Weekly export sales were 347,300 MT, up 22% from the prior week but in line with trader estimates, USDA data this morning showed. Next week’s focus will be on the annual Wheat Quality Council spring wheat tour of North Dakota.  USDA earlier this month forecast a crop of 572 million bu., down from 623 million bu. last year. Price weakness this week reflects speculation that crop scouts will find better yields and higher production after above-normal rains the past month.  

Cotton: Cotton futures finished with losses of 56 to 111 points through the May 2020 contract. The October contract led today’s price declines. Cotton futures faced followthrough selling after Wednesday’s downside breakout from the short-term consolidation range on the daily charts. Given a lack of supportive news, funds continue to build their net short position. Until there’s something to reverse that, cotton futures face more near-term downside price risk. Weekly export sales were stronger than recent weeks at 54,000 bales for 2018-19 and 218,900 bales for 2019-20. Export shipments were also solid at 310,300 bales. However, the numbers weren’t strong enough to entice buyer interest. Given the falling prices, traders likely want to see cotton export sales in the 300,000 to 400,000 bale range to signal prices have fallen far enough to attract strong demand.  

Hogs: Lean hog futures saw a mix of followthrough buying and profit-taking after yesterday’s surge to the upside, which resulted in a widely mixed finish. August futures settled with gains of 77 ½ cents, while October lean hogs closed 92 ½ cents lower. Lean hogs extended yesterday’s gains on the open, but the market was unable to push aggressively higher. After the strong move to the upside over the past several weeks, some profit-taking is healthy. Early support came from a strong showing in today’s Weekly Export Sales Report. While sales of 30,100 MT for 2019 did not include China as a top buyer, the sales were still up an impressive 43% from the prior four-week average. And exports were even more impressive at 36,800 MT, with China and Taiwan as the top recipients. Stronger demand has sent cash hog prices marching higher over the past week and a half and pork prices are finally rising. The pork cutout value is up $4.31 from week-ago levels, though movement has yet to impress.   

Cattle:  Live cattle futures prices closed down 72 1/2 cents in the August and off 70 cents in the October contract. August feeder cattle futures finished down $1.375. Prices ended near their session lows. Futures saw selling pressure from steady-to-weaker cash trade seen on Wednesday. Slaughter is running a little larger than a year ago and equal to last week. Dressed weights continue to trail year ago and the five-year average, supporting a widening premium for Choice beef to Select. Wholesale beef prices saw Choice up 62 cents and Select gaining 48 cents today. There were a light 66 loads moved, however. Beef export sales in the week ended July 11 were up 8% from the four-week average at 19,800 MT, led by sales of 8,000 MT to Japan, according to USDA data this morning. Shipments rose 5% above the prior four-week average.

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