After the Bell: Soybeans Led Pre-Weekend Rally on Chart Buying , China Buying Rumors

Posted on 07/19/2019 2:31 PM

Corn: Corn got beat up earlier this week and prices rebounded Friday on light short covering. December corn rose 6 cents to close at $4.35 ¾, paring the weekly decline to 23 ½ cents. Prices formed an outside week with a lower close but did not close below last week’s low. Price did hold above key gap support left from late May at $4.20. The shorts wanted to take some profits and there was little selling above the market as soybeans surged. The weather will be searing hot over the eastern belt this weekend, but temperatures break next week, albeit with less than normal rainfall. The corn should be able to do the bulk of its pollinating with temperatures at or somewhat below normal, after unexpected and beneficial rains this week reached many areas from South Dakota to Illinois.  As a result, the trade should be looking for corn conditions to come in unchanged to up 2% from the 58%  rated “good” to “excellent” reported last Monday. Corn silking probably reached 33% to 38% done, compared with 17% a week ago. The supply story probably won’t be known until combines roll this fall or maybe as late as the final crop estimates next January.  

Soybeans:  Nearby soybean futures gained around 20 cents on the day and managed to recover in one day most of this week’s losses. For the week, November soybeans lost 12 1/4 cents. August soybean meal was up around $4.00 today and August bean oil gained 46 points. Given today’s short-covering and weather-inspired gains in soybeans, Monday’s price action could be more volatile, especially if weather forecasters have significantly changed their Corn Belt outlooks from what they said Friday afternoon. Right now, the weather forecasts are for cooler next week, and rains this week have provided some insurance against heat into Sunday. The key remains August weather and forecasters do see some heat. The Aug. 12 USDA acreage and yield updates are the next big data point for grain market traders. U.S. crop size and acreage uncertainty will continue keen until then.

Wheat: Winter wheat futures prices ended up 6 1/2 to 9 cents today, while spring wheat was up 3 to 5 cents. For the week, SRW December wheat lost 22 1/2 cents and December HRW was down 27 cents. Today’s futures gains were mostly short covering and some position evening heading into the weekend. Some underlying support also came from concerns about dry weather in parts Europe and the Black Sea region. Better rains in the U.S. and Canadian spring wheat belts also add to the lack of buying interest today. Limiting the upside for wheat for at least the near term will be U.S. harvest pressure and concerns about future global demand for high-priced U.S. wheat supplies. Focus will be on the annual U.S. spring crop tour with traders looking for scouts to find better yields.  

Cotton: Cotton futures rose from new contract lows earlier this week and closed higher for the week. December cotton gained 136 points to 63.07 cents and 39 points this week.  December cotton closed above where it opened this week and that is a positive sign after falling to new lows. The drop to new contract lows last week was not confirmed by a new low in the weekly oscillators and today’s strong rally turned the daily momentum higher. Followthrough gains next week would likely trigger additional fund short covering and probably some new overseas buying of U.S. fiber. After two weeks of gains, the weekly USDA crop condition ratings may decline in Monday’s weekly report. Too much rain in parts of the Delta and heat across The U.S. probably increased crop stress.   

Hogs: August hogs closed up $1.10, while the October contract gained $2.025. Both contracts hit five-week highs today and closed at technically bullish weekly high closes. For the week, August lean hog futures gained $3.225.  Look for some follow-through technical buying on Monday, following the strong close in hog futures Friday. This week’s strong performance in the cash hog market will also give the bulls some fuel next week. The national average cash price rose 71 cents to $72.24 on Thursday and was up from $67.82 a week earlier. However, futures trading could also turn quieter Monday, ahead of the USDA Cold Storage Report on Monday afternoon. Hog slaughter the first four days of this week was up 1.3%, well below the double-digit gains seen recently and a sign of easing supply pressures. The hog futures market will likely continue to be supported by notions Chinese demand for pork imports will continue to climb into 2020, with its supplies down at least 25% because of the outbreak of African swine fever. 

Cattle: Cattle and feeder cattle rallied to pare weekly declines on Friday. August live cattle rose 20 cents to $107.60 and down 87.5 cents for the week. August feeders rose 55 cents to $139.975 and down $1.625 this week.  After three weeks of gains, the cattle market was due for a pause. There was no technical damage to the charts and prices should start firmer next week. Boxed-beef prices just won’t give up much, defying the calendar, as most primal cuts were higher on the week. At midday, the Choice cutout value was up 62 cents from a week-earlier close and Select was down 36 cents. Packer margins were estimated at near $118 today, down from $139.65 a week ago, according to HedgersEdge. Slaughter this week was 651,000, down 4,000 head from a week earlier and up 16,000 from last year, USDA estimates. Hot weather this week probably curtailed weight gains and that will add to a more positive outlook for cash cattle next week. This afternoon’s monthly Cattle on Feed Report showed total on feed numbers were up 1.8% on July 1 from a year ago and the number of cattle placed on feed fell 2.3%. Both numbers were in line with trade estimates.

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