After the Bell: Grains, Soybeans Retreat, Consolidating Recent Gains Amid Warmer Forecasts

Posted on 06/19/2019 2:30 PM

Corn: Corn futures ended lower but above the session lows. July corn fell 8 ¾ cents to $4.41, with December falling 9 ¾ cents to $4.53 ¾. Prices fell for a second session after reaching a 5-year high on the continuation chart on Monday, amid a central U.S. weather forecast that shows improvement. Supply-driven markets need daily news suggesting further supply loss risk and the market did not get that today. The forecast is sharply drier than the overnight run for Indiana and Ohio but not dry.  Rainfall for the next 5 days is forecast to range from ¾ inch to 2 inches but less widespread. The key is warmer temperatures that will aid crop development into early July.  Clearly some of today’s selling came from frustrated bulls closing out positions after the failure to hold or build on Monday’s rally. It’s nearly impossible to trust any crop forecasts given the unknowns about planted acreage and final yields. Accordingly, the CBOT is consolidating, awaiting fresh supply news.

Soybeans:  Soybean futures closed down 11 to 12 1/4 cents today and near daily lows. Meal futures were down just over $5.00 in the nearbys, while July soybean oil closed down 2 points. The soybean market today saw a corrective pullback from recent solid gains, which is normal. July soybeans fell for the first time in eight sessions after rising to a three-month high on Tuesday. A bull market needs to be fed fresh, positive inputs often to keep prices trending up, and it could be that the present fundamentals of wet weather and delayed plantings have now been factored into futures prices--or maybe not. A rebound in prices Thursday would suggest it’s still “game on” for the bulls. It could also be that the soybean futures market will now chop in a sideways fashion ahead of the important USDA acreage and quarterly grain stocks data due out on Friday, June 28. Rarely by mid-June have grain traders been so uncertain regarding both acres planted and yield potential, and that likely means plenty of support should develop near current soybean prices.  Although President Trump sounds optimistic on a U.S./China trade deal, the ag markets are more apprehensive. Ag traders are unlikely to react to U.S./China trade talk until a deal is signed.

Wheat: Wheat futures faced pressure throughout the day and the market settled 7 ¾ to 11 ¾ cents lower, with the HRS market leading to the downside.  Forecasts calling for widespread rain on Canada’s Prairies weighed on prices this week as the region has been dealing with drought. Some of this precip is also expected to move into the U.S. spring wheat belt, which would be beneficial for early crop development. The recent price setback has traders wondering whether a top has been placed, which is also making them wary of the long side of the market. Spillover support from corn and soybeans was also lacking today. The dramatic price surge over the past month also stoked concerns about whether U.S. wheat will be able to compete for export business this summer. Egypt’s state grain buyer purchased 110,000 MT of Russian wheat and 180,000 MT of Romanian wheat in its tender today

Cotton: Cotton futures settled with gains of 6 points in the July contract, while new-crop contracts ended 30-plus points higher. Futures ended low-range. Cotton futures were mildly supported by weakness in the U.S. dollar index today, which helped spur corrective buying. But the bulk of the pressure on the dollar came near the end of the trading day for cotton as futures were trimming gains. Weekly export sales will give the market some fresh fundamental guidance tomorrow morning. But it would likely take a sales figure in excess of 250,000 bales and exports of around 400,000 bales to excite traders. Sales under 100,000 bales and export of less than 200,000 bales would likely be seen as price-negative.  

Hogs: July lean hogs closed up $0.325, while the August contract gained $1.375. Both contracts closed near their daily highs. Short covering in the futures market was featured today following selling pressure that pushed prices to 3.5-month lows in recent sessions.The pork cutout value slid another $1.74 in the noon report today led by losses in hams and loins. Movement was 147.40 loads. Given record seasonal slaughter tallies of late, strong product movement at home and abroad is essential. Cash hog bids softened 46 cents on Tuesday after rising 29 cents to start the week. An abundance of hogs has made it tough for the cash market to move higher. Weekly USDA export sales data on Thursday morning will help to provide direction to the futures market. The U.S. and China said their presidents will meet in Japan next week, with lower-level talks expected to get under way as soon as today after a month-long stalemate.  

Cattle: Live cattle closed lower and feeders were mixed. August live cattle fell $1 to $104.55 and December fell $1.075 to $110.35. August feeders were down 72.5 cents at $136.525, with November down 15 cents at $137.825. After opening higher and closing lower Tuesday, the market was under pressure throughout the session. A bearish tone in the cash cattle market was the primary source of today’s futures retreat as midday beef cutout rose today on active sales. Choice rose $1.39 and Select gained $1.69. Cattle feeders are dismayed by their apparent lack of any leverage, almost made worse by the fact the industry is current on marketings. Packer margins are near records and kills have been big. Beef demand has been excellent as well. Both live cattle bids and beef are above year ago levels despite recent weakness.

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