After the Bell: Dry Weather, Chart Buying Boosts Corn and Soybeans

Posted on 07/29/2019 2:50 PM

Corn: Corn futures faced pressure on the open, but the market found support at the May 28 gap area and buyers carried the day trading session. Futures settled high-range with gains of 2 to 2 ½ cents. Corn futures performed quite well considering the benign near-term forecast, comments downplaying the potential for any major developments on the U.S./China trade front, a reminder of slack demand for U.S. corn (via today’s export inspections report) and comments that the U.S. ethanol sector is in trouble. Temperatures are expected to be mild near-term, limiting concerns about building dryness in many areas. Analysts surveyed by Reuters expect no change in USDA’s condition ratings today. But warmer temperatures are in the outlook next week, which could bring the drying trend front and center and bulls make to the table.

Soybeans:   Soybean futures rose and closed mid-range. November beans were up 3 ¼ cents to $9.04 ¼, with December meal rising $1.80 to $311.50. December oil was down 5 points to 28.97 cents. Prices ended higher without much enthusiasm or trading volume. That may be tied to both first-notice day against the August contract this week as well as no severe heat on the forecast maps for the next two weeks. Spotty showers moved through Iowa and Illinois the past day but did not provide much moisture relief to crops that have been drying out after 30 days of dryness. Traders are looking for little change in the weekly USDA crop condition ratings later today. USDA reported more than 1.031 million metric tons (MMT) of soybeans were inspected for export in the week ended July 25, with China taking about 600,000 tons. That was a slightly positive factor, offsetting no new sales announced by USDA’s daily reporting service this morning. Still, China has the majority of unshipped sales on the books, with non-Chinese unshipped sales down from a year ago.  

Wheat:    Wheat futures closed in the upper half of the daily range. September SRW wheat was up 7 ½ cents at $5.03 ½, with September HRW rising 4 ½ cents to $4.36 ½. September spring wheat gained 8 cents at $5.32 ½.  Wheat started lower overnight and pushed higher on chart signals and spread unwinding.  Harvest pressure is beginning to ease as farmers wrap harvesting in the central plains, closing grain bin doors and starting to firm some cash basis bids.  The latest CFTC report had the managed money net long about 11,800 contracts of SRW wheat, selling about 7,000 contracts on the week when prices fell 21 cents. Commercials trimmed about 10,000 shorts in the week.  Southwestern Canada’s prairies will be dry over the next 10 days. Many crops in southern Alberta are already too dry and not much relief is expected. Net drying is also occurring from west-central and southwestern through south-central Saskatchewan.

Cotton:  December cotton futures closed down 33 points at 64.21 cents today, which is near the daily high. The futures market was pressured to start the trading week by notions this afternoon’s weekly USDA crop progress report will show an uptick in U.S. cotton condition ratings. There is also talk the U.S. cotton crop is getting larger, with some thinking USDA in next month’s supply and demand report will up the production number to 23 million bales from 22 million reported this month. Cotton futures could be impacted by key outside market events this week. Friday’s U.S. employment report caps this week’s data. But the event dominating markets this week is Wednesday’s Federal Reserve monetary policy decision. The markets are demanding at least a 25 basis-point cut and nothing less than a 25-point cut is expected, with little real impact on the economy except a further inflation of stock prices.  

Hogs:  Hogs closed sharply lower to limit down. August hogs fell $2 to $84.425, while October fell the $3 exchange limit to $76.45. Futures followed the cash hog market’s $3.60 drop on Friday. While prices were still up more than $7.25 last week the drop was a remainder of ongoing large slaughter supplies. Slaughter came in at 457,000 head Monday, down from 473,000 last week and above the 441,000 a year earlier. Pork cutout on Monday fell $1.10 on as weakness in hams, loins and ribs offset gains in bellies and butts. Rapidly rising pork prices in China may help to push trade talks forward this week but traders want to see evidence of stepped-up buying and temporary elimination of tariffs to rekindle bullish enthusiasm. Chinese pork prices rose by nearly 30% in June compared with a year earlier, according to the Ministry of Agriculture and Rural Affairs, with the spread of African swine fever showing no sign of abating, causing domestic production to plunge. Prices for other meats, including chicken, are also expected to rise substantially, putting further pressure on the discretionary spending of Chinese consumers.  

Cattle: August live cattle futures closed steady today, while the October contract lost 45 cents. Both hit nearly three-month highs early on today. November feeder cattle futures closed down 90 cents today. Cash cattle prices climbed to the $115.50 to $117 area on Friday in the Iowa/Minnesota market, which was steady to higher than prices earlier in the week and the week prior. Trade also got started in Kansas at steady prices of $111, but volume was light. There have been no other reports of active trade so far. That could signal packers start the week in need of supplies, but it also means more cattle will be carried over to this week’s showlists. Today’s tepid price action in the cattle futures markets does not suggest packers want to bid the cash market up this week. Boxed beef cutout values at midday today were up 82 cents on Choice and up 23 cents on Select grade.  Movement was light at 42 loads.  

 

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