After the Bell: Corrective Rebound in Grains, Soy Amid Some Drier, Warmer Forecasts

Posted on 08/08/2019 2:54 PM

Corn: Corn futures enjoyed an upside day of trade and the market settled high-range with gains of 4 to 4 ¾ cents. Traders are favoring the upside as they even positions for USDA’s Aug. 12 reports. The data will include the results of its resurvey of 14 Midwest states, in addition to Farm Service Agency information on prevented plant acres. The initial release of certified acreage data will coincide with USDA’s 11:00 a.m. CT report release. On average, the market is looking for a smaller U.S. corn crop estimate around 13.193 billion bu. on lower acres and yields versus July, but the wide range of guesses speaks to widespread uncertainty about the data. The demand side of the balance sheet is expected to be far less friendly. Corn futures also enjoyed some spillover support from a push higher in the soybean futures market today. Traders may very well be building a bit of weather premium back into prices as dryness is building in key areas like Iowa and Illinois.

Soybeans:  Soybean futures gained around 16 cents in the nearby contracts today and closed near their daily highs. Soybean meal futures were up just shy of $2.00 today, while September soybean oil gained 100 points.  Short covering was featured in soy markets today, following recent selling pressure that drove prices to multi-week lows earlier this week. Prices also firmed amid uncertain U.S. production ahead of USDA’s Monday (Aug. 12) first survey-based estimates and updated acreage data from 14 mostly Midwest states. U.S. soybean production may fall between 3.633 billion and 3.974 billion bu., with an average of 3.800 billion bushels, a Reuters poll showed. In July, USDA projected a 3.845 billion bu. bean crop. The dry spots of western Iowa, Illinois and Indiana will remain thirsty until Sunday. Starting Sunday and through Thursday, two fronts will come through, bringing scattered rain with forecasters divided about amounts. USDA’s daily export announcement service said private exporters reported new export sales of 135,000 metric tons (MT) of soybean meal for delivery to the Philippines during the 2019-20 marketing year.

Wheat:  SRW wheat futures finished with gains of 7 1/4 to 10 1/4 cents through the May 2020 contract. HRW futures ended narrowly mixed with a slight downside bias, while HRS futures finished narrowly mixed with a slight upside bias. SRW wheat futures were pulled higher by gains in the soybean and corn markets. Traders also began evening positions ahead of what are likely to be market-moving reports from USDA next Monday. Weekly export sales were near the top end of pre-report expectation at 487,700 MT. While exports are running stronger than year-ago, they aren’t strong enough to be supportive on their own. Traders will need to see consistently stronger export sales to turn it into a price-supportive factor.

Cotton: December cotton futures rose 75 points to 59.58 cents and near session highs. Futures rose more than 1% on Thursday, moving away from 3-1/2-year lows touched earlier in the week, helped by positive export sales data and as some investors covered short positions ahead the monthly supply, demand report next Monday.  The weekly export sales report from USDA this morning showed net sales for 2019-20, which began Aug. 1, totaled 179,500 running bales (RB), with increases reported for China (60,100 RB), India, Japan and Vietnam. The psychology of having China in the market despite the trade tensions encouraged some buying and short-covering activities.  Next Monday’s USDA monthly supply and demand report is the next big data point for cotton traders. Improving U.S. cotton crop prospects have most cotton market watchers looking for a report that will be neutral to bearish with larger production and inventories.

Hogs: August lean hog futures that expire next week were down 37 1/2 cents at $77.35 today. October lean hogs gained $1.025 at $67.875. USDA today reported U.S. pork export sales last week rose 55% from the prior week’s anemic tally but were down 13% from the four-week average. China bought just 1,400 metric tons last week. Shipments remain relatively active with China the top destination. China on Thursday confirmed a new case of African swine fever in south China's Guangxi Zhuang Autonomous Region. The disease was detected in a truckload of pigs at a highway toll station in the city of Fangchenggang of Guangxi. Average cash hogs fell $1.51 Wednesday. Today's midday pork cutout value rose 87 cents on gains in bellies and loins. Sales were lighter at 123.11 loads. Slaughter this week is estimated at 1.376 million head, up from 1.313 million a year ago

Cattle: Cattle and feeder cattle closed higher and in the upper half of the daily trading ranges. October live cattle rose 30 cents to $106.75. November feeders advanced 57.5 cents to $139.475. Prices rose on stronger overseas demand for U.S. beef. Weekly beef export sales in the week ended Aug. 1 rose 94% from a week earlier and were 41% higher than the prior four-week average, USDA reported this morning Top buyers were Hong Kong, Japan and South Korea. Shipments were up 8% from the four-week average.Slaughter the first four days of this week was 476,000 head, down 1,000 head from a week earlier and 3,000 head greater than a year ago. Midday wholesale beef cutout values were higher today, with Choice up 24 cents and Select up 29 cents. Sales were moderately active.

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