After the Bell: Grains, Soybean Retreat Ahead of USDA Reports Next Week

Posted on 06/21/2019 2:32 PM

Corn: Futures pulled back to finish lower this week after nearby futures rose to a five-year high to begin the week. July corn fell 10 3/4 cents this week to close at $4.42 1/4, while December futures were down 10 cents to $4.53 ½. The market will key off the latest weather forecasts to see how long the warmer, drier trend extends into early July to give the crop some much needed warmth. Monday’s weekly USDA crop report will provide the last estimate of corn planting progress. That number could be 94% to 98% complete, up from 92% estimated on June 16. The difference will be whether USDA scouts count prevent plant acres as planted or just look at progress relative to what was expected to be planted this year. The weekly corn conditions are unlikely to change much from the 59% rated in “good” and “excellent” condition given the cool, wet weather. The focus next week will be on June 28 USDA reports updating acreage and estimated June 1 inventories. The USDA acres survey probably won’t provide a clear look at the number of prevent plant acres since it was taken earlier this month. But it will be starting point. June 1 inventories are expected to come in at 5.335 billion bu., up from 5.305 billion bu. a year earlier, according to the average of analyst estimates in a Bloomberg poll. We forecast the stocks at 5.275 billion bushels.  

Soybeans: Futures fell Friday, giving back all of Thursday’s gains but still managing to close higher this week. July soybeans rose 6 cents to close at $9.02 ¾ but down from the three-month high earlier this week at $9.21 ½. Soybean product markets were mixed this week with meal closing lower and soybean oil futures rising. Futures crush margins fell 14 cents a bushel this week.  It was a disappointing close for the week, with prices ending near weekly lows. But that may have little impact on prices next week with heavy rains this week expected to curtail U.S. soybean plantings and lend a yield drag on late-planted fields On June 28, the USDA will update 2019 planted acreage forecasts but traders are fully aware this will not be the final number. Traders surveyed by Bloomberg forecast acreage will rise to 84.68 million acres, on average, up from 84.62 million projected by farmers in the March intentions report. Our estimate is 88 million acres. Also, next Friday, USDA will release its March 1 inventory report with traders surveyed by Bloomberg looking for 1.865 billion bushels, up more than 50% from a year earlier and record large. Our estimate is 1.879 billion bushels.  

Wheat: Soft red winter wheat futures prices closed steady to down a penny today and near mid-range.  On the week, July SRW lost 13 1/2 cents. Winter wheat futures finished the day down 5 1/4 to 7 3/4 cents and closed at technically bearish weekly low closes. For the week, July HRW fell 23 3/4 cents. September spring wheat futures fell 26 ½ cents this week. Weekend weather and updated weather forecasts will be the focus of wheat traders come Monday morning. Much of the selling pressure in wheat futures today came from slightly drier and warmer forecasts for next week that should aid maturation and harvesting of the winter wheat crops. Soft red winter wheat futures are following corn, and a shrinking SRW supply from excessive rain also is keeping this market elevated versus other wheat varieties.Spring wheat prices continue to languish. High U.S. crop ratings despite the slow planting season and rains, and more in the forecast for the Canadian Prairies, are pressuring the market. Spring wheat’s normal premium to SRW futures has nearly evaporated, a sign of potentially burdensome HRS supplies.

Cotton: July cotton futures closed down 202 points and hit a contract low today. December futures lost 36 points and closed at a technically bearish weekly low close. For the week, July cotton futures lost 471 points. Look for some follow-through technical selling pressure in the cotton market come Monday morning, following the poor performance of the market today. Cotton traders’ focus is shifting to the new crop as the new marketing year is about five weeks away. That means the market’s first data point to watch will be the USDA crop progress report on Monday for an update on planting progress and crop conditions. This week’s improvement in the national crop rating was a surprise to some with all the excessive rain in parts of Texas and the Delta.  

Hogs: The nearby lean hog futures contracts closed locked down the daily $3.00 limit today, and hit 3.5-month lows. For the week, August lean hog futures lost $2.15. Look for follow-through selling pressure in hog futures on Monday following today’s daily-limit losses. Cash hog prices tumbled late this week, dashing hopes the cash hog market was building a base of support. Wholesale pork cutout values dropped another 36 cents today. USDA’s Cold Storage Report out later today will provide another read on demand. Hog slaughter is running more than 9% above a year ago this week, a fourth straight week of excessively large runs and increasing speculation that U.S. producers dramatically expanded herds last fall on speculation African swine fever outbreaks in China would result in massive exports this year. Thus, big supplies remain a major concern for the hog market.  

Cattle: Cattle and feeder cattle closed lower Friday and for the week, with August live cattle setting new contract lows. August cattle fell $1.725 to $102.225, down $3.25 this week. August feeder cattle fell $1.025 to $137.675, down $1.85 this week.  This week’s lower cash prices were to blame for today’s slump, and cattle sold even lower out until the middle of July this week. This will weigh on prices next week and has completely defeated cattle feeders, who started the week looking for higher packer bids because of current marketings. Beef prices marked lower again at midday today, with Choice down 72 cents and Select down 46 cents. Sales were light after good movement earlier this week. USDA’s monthly Cattle on Feed report this afternoon showed on feed numbers on June 1 were up 1.6% from a year ago, compared with traders looking for a 1.4% gain. Placements fell a smaller-than-expected 2.8% from May 2018  

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