After the Bell: Grains Rebound After Holding Key Support, Weather Concerns Remain

Posted on 06/06/2019 3:32 PM

Corn: Nearby futures closed up around 5 to 6 cents and near daily highs today. Corn bulls rebounded smartly from Wednesday’s sell-off despite weather forecasts for the longest break without widespread rain just ahead for the Corn Belt. Still, it may be difficult to get corn plantings above 85% completed by next week after reaching just 67% done as of June 2. USDA will update planting and emergence progress on June 10 and is expected to release it first national corn condition rating. That could be the next catalyst for a bull run because crops look generally unimpressive. A news story from Reuters today said that based on the way crop condition scores are formulated and the record-slow corn crop progress that grain traders may be “low-balling the health of the U.S. corn crop when the government publishes its first assessment on Monday.  Today’s weekly USDA export sales report was a major disappointment for corn bulls, at a net-sales reduction of 8,800 MT for 2018-19 this past week. Sales of 23,500 MT for 2019-20 did little to improve the overall report.

Soybeans:  Soybeans closed down 1 to 2 cents as meal fell $1.80 to $2.40. Soybean oil futures were up 47 to 54 points. U.S. soybean planting has been severely slowed by rains, with USDA reporting just 39% of the crop was in the ground as of June 2, the slowest on record. Only 19% of the soybean crop has emerged. Progress is more active this week but will remain delayed past the longest days of the year—never a good start for producing big yields. The big negative is how many acres might be switch from corn to soybeans this year.  Weekly old-crop sales of soybeans stood at 510,000 MT, slightly above trade estimates and included 214,000 MT sold to unknown destinations. China took 72,300 MT, most of which was switched from unknown. USDA also announced 73,700 MT in sales for 2019-20. Total new-crop commitments are down 76% compared with forward sales a year earlier. Soybean meal sales last week came in at the low end of trade estimates.  

Wheat: SRW wheat futures closed up 12 to 19 1/4 cents today, while HRW contracts gained 9 1/2 to 11 1/4 cents. Prices closed nearer their daily highs. Spring wheat futures closed 13 1/2 to 18 cents higher. Today’s solid gains give the wheat bulls fresh and needed momentum heading into Friday’s trade. There are adverse weather forecasts for global wheat crops. There are drier conditions forecast for parts of Russia, Ukraine, Canada and Australia over the next two weeks. The southern U.S. Plains will see a continued wet pattern with above-average rains over the next five days, but then it will be quieter for much of the next week. A solid rebound in corn futures prices today also spilled over into buying interest in wheat futures. The weekly USDA export sales report for the week ended May 30 was slightly positive for wheat. USDA reported 2019-20 wheat sales of 501,900 MT, topping trade estimates.

Cotton: Nearby cotton futures prices closed unchanged today but nearer daily highs. Buying interest was limited today by weekly USDA export data that showed cotton net sales during the 2018-19 marketing year at 182,000 running bales (RB), which is down 37% from the previous reporting week and down 36% from the four-week average. For 2019-20 net sales were 51,600 RB. Shipments of 308,600 RB were down 25% from the previous week and off 18% from the four-week average. There were 32,700 RB shipped to China in the reporting week.  However, sellers were hesitant in the cotton market today as the U.S. dollar index is slumping and today closed at a nearly two-month low close. A strong rebound in the U.S. stock market after the major indexes hit three-month lows on Monday is also working in favor of the cotton market bulls.

Hogs: Futures were narrowly mixed today, with August falling 45 to $85.625 and December rising 22.5 cents to $79.40. Wholesale pork prices rose at midday, with cutout values rising $2.28 led by gains in bellies and hams. However, sales were light to moderate and below levels needed to clear shelves, with slaughter this week running 6%, or 107,000 head larger than a year ago.  Packer margins estimated at $4.70 per head, down from $7.10 a week ago, according to Trade uncertainty between with Mexico and China is keeping rally attempts in check. Still, stepped-up purchases have pushed China past Mexico as the biggest buyer of U.S. pork.  USDA said exporters sold 33,800 MT of pork last week. That was down 38% from big sales a week earlier but still up 1% from the prior four-week average. China bought 17,400 MT and Mexico bought 6,200 MT. Pork export shipments last week fell 9% from the prior four-week average but Mexico and China were the top two destinations.  

Cattle: June live cattle futures finished 25 cents lower, while deferred contracts posted mild price gains. August and September feeder cattle posted mild losses, while fall contracts ended slightly higher. Mild corrective buying supported deferred live cattle futures again today, though buyer interest remains limited by trade uncertainties. Buying in front-month futures was even more limited as traders are skeptical the cash market has stopped is price slide. Until the cash market puts in a definitive low, the upside in futures will remain limited to mild corrective buying. Nearby feeder cattle futures continue to trade opposite the corn market. That signals corn prices have recovered to levels where traders feel any more price strength will negatively impact feeder cattle demand. But a price drop would likely trigger increased feeder cattle demand.  


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