AFter the Bell: Soybeans Lead Higher on Planting Delays, Grains Pause

Posted on 06/17/2019 3:00 PM

Corn:  Corn futures closed up 1 1/2 to 4 cents today, with December futures leading gains. Prices hit contract and five-year highs today amid a major weather market playing out in the grains at present. The scramble for cash supplies seen last week subsided a bit today, allowing prices to drift and some profit taking on bull spreads to emerge. July options expire on Friday and that probably also contributed to mild selling pressure today as traders liquidated positions. The weekly CFTC reported showed funds increased net-long positions 23,969 futures and options contracts to 111,212 contracts, about what was expected, but they probably added another 100,000 contracts-plus the last three days of last week. Much of the support in corn futures stems from USDA last week cutting U.S. corn production by 9% in its monthly supply and demand report when the market had expected a 5% cut. Seed genetics will truly be tested this season. Wet, cool weather will keep crop development sluggish. The weather forecasts for the Corn Belt hold some promise for warmer weather later this month, which may have triggered some profit taking. In supply-driven markets, the rally requires almost daily input that the crop is still getting smaller or will get smaller.

Soybeans: Soybean futures finished with gains around 16 cents in the most actively traded contracts. Soymeal futures firmed around $1 and soyoil was generally around 40 to 50 points higher. Soybean futures were supported by planting delays and weather concerns. Heavy weekend rains across already saturated areas of the southern and eastern Corn Belt and a wet forecast this week has traders thinking the number of soybean acres that won’t get is on the rise. As a result, funds continue to cover short positions. As of June 11, funds were still short nearly 89,000 contracts of soybeans. Traders also unwound some long corn/short soybean spreads today. NOPA members crushed 154.8 million bu. of soybeans in May, which fell well below trade estimates and lagged the year-earlier pace for a third straight month. Midwest flooding that closed some plants and caused logistical issues likely kept the crush pace slower than anticipated. As a result of the disappointing data, we’ve lowered our 2018-19 crush forecast by 10 million bu. to 2.090 billion bushels.  

Wheat:  Wheat futures ended narrowly mixed after choppy session. July SRW futures rose 1 cent to close at $5.39 ½, July HRW fell ¾ cent to $4.75 ½ and spring wheat was down 3 cents. Wheat remains well supported by concerns about too much rain on maturing U.S. crops and developing dryness in other exporting nations. The problem is the U.S. wheat price rally has jumped well above overseas prices and that makes U.S. wheat unattractive to potential buyers. Wheat remains a follower of the rally in corn prices and when that market gave back its gains at midsession, it triggered selling in the wheat futures. Nonetheless, feed buyers in the eastern U.S. are already lining up HRW supplies because of the concern about excessive corn production losses from Michigan, Illinois, Indiana and Ohio to the northeast from too much rain. There are some estimating regional losses in those states may top 50%, requiring imports to meet feed demand or shipments to the Southeast. The world wheat supply is in slow retreat, capping rallies but opening upside potential later this year if conditions worsen

Cotton: Very mixed closed with July tumbling late and closing down 61 points at 65.33 cents while December finished up 47 points at 66.22 cents. Cotton prices moved higher in early trading after the expiration of the July options last Friday. Funds increased net-short positions to 30,241 futures and options as of Tuesday, June 11, up from 27,805 a week earlier. The market continues to be supported by speculation cotton planted acreage will not increase as much as expected earlier this year. Too much rain is also causing some yield concerns in parts of the Delta and Texas. Traders will be watching weekly export sales and shipments closely the next several weeks for any signs of new Chinese demand. The cotton association in China requested the government grant a waiver on tariffs on imports of U.S. fiber.

Hogs: Lean hog futures saw a mix of followthrough selling and short-covering today, with the latter winning out at the close. Futures settled 87 ½ cents to $1.70 lower through the April contract. Lean hog futures enjoyed some corrective buying to start the week, as an early drop to the lowest prices since early April triggered some bargain purchases. But concerns about the market have shifted from demand to supply after back-to-back weeks of kills topping 2.4 million head, including a 9.9% surge versus year-ago to 2.431 million head last week. With that many hogs coming to market, it will be tough for the product market to rise. This morning, the pork cutout value dropped 43 cents and movement was modest at 141.36 loads. Export demand will be important for keeping supplies from becoming burdensome.

Cattle: August live cattle futures closed up $1.25, while the October contract gained $1.125. Both contracts finished nearer their daily highs. August feeder cattle futures closed up $1.175. Short covering was featured in the cattle futures markets today, following recent selling pressure. Very current producer marketings, steer weights below average for this time of year, mixed beef prices and steady cash cattle last week should all work to limit selling interest in the futures this week. A solid rebound in the U.S. stock market the past week and decent U.S. economic reports suggest a pick-up in consumer spending and better demand for beef at the meat counter at least through the summer.Today's noon beef report showed the Choice grade beef up 42 cents and Select down 37 cents on light movement of 49 loads.

Add new comment