After the Bell: Weather-Delayed Plantings Keep Firm Tone Under Corn, Soybeans

Posted on 05/22/2019 3:13 PM

Corn: Corn futures finished slightly higher and about 8 cents off the session lows. July corn was up ¼ cent to $3.94 ½, with December up 2 ¼ cents at $4.12 ¾. Corn continues to find both commercial and fund buying with the planting delays. With the optimal corn-planting window closing quickly, a wet forecast for the next week to 10 days, especially in the western Corn Belt and half of the crop left to plant, acreage and yield expectations are declining.  Funds have aggressively trimmed their short exposure since the contract low and key bullish reversal on May 13, with many buying calls to offset their short positions. The upside remains tied to weather and fund activity. The next market-moving event will be the first crop conditions report which is probably at least three weeks away. USDA doesn’t release a conditions survey until at least 50% of the crop has emerged. Only 19% was emerged as of last Sunday.  

Soybeans: Soybean futures posted gains of 6 1/2 to 7 cents today, though that was well off session highs. Meal futures gained around $3, while soyoil posted gains of 14 to 17 points. The soybean market bounced back from yesterday’s losses as concerns faded that the second round of tariff aid for farmers would be based on 2019 plantings. Reports of such weighed on soybeans Tuesday amid concerns producers would increase soybean acres despite market fundamentals telling them to plant fewer soybeans to reduce burdensome supplies. Details of the second tariff payments will be revealed by the Trump administration on Thursday. Weekly soybean export sales are expected at 0 to 400,000 MT for 2018-19 and 100,000 to 400,000 MT for 2019-20 in tomorrow’s update. Not only will traders be watching total export sales levels, but also Chinese purchases or cancellations. 

Wheat: Winter wheat futures were down 2 ¾ to 6 cents, while spring wheat was narrowly mixed. The market discarded reports from a freeze in western Kansas and eastern Colorado overnight. The late development of this year’s crop, along with a massive surplus of old-crop supplies, limited concerns about minor freeze losses. However, a persistent wet pattern into June could begin to offer more support but quality losses usually have limited impact on prices. The uncertainty surrounding a U.S. Trade Aid program produced tentative trade today. Some expected USDA to release more detail on Thursday. Rains this week in parts of Canada, Europe and the Black Sea region were beneficial, but more will be needed in June to reach optimal yields. A drier outlook for the Volga Valley region in Russia with hot temperatures is one area to watch.  

Cotton: July cotton fell 57 points to 66.75, while December lost 72 points to 66.18 cents. Prices closed near mid-range. The market is pressured at mid-week in part by major U.S. retailers reporting sales below estimates, suggesting a possible slowdown in clothing sales. The U.S. cotton-planting pace has increased up over the past week. U.S. planting in the southeastern states will likely finish soon, but the region is expected to dry out quickly in the next few weeks and that will lead to dryland crop stress. U.S. Delta weather will improve over the next two weeks with less rain and consistent warm temperatures. Southern Texas will be trending drier for a while and West Texas will see alternating periods of severe thunderstorms bringing heavy rain and hail with periods of sunny and warm weather.

Hogs: Lean hog futures closed mostly lower for a third session. Futures settled 7 to 45 cents lower through the February 2020 contract. Prices were pressured by a drop in fresh pork prices, with all primal cuts declining amid light sales. Price action in the lean hog market this week signals traders are far more focused on the escalating U.S/China trade spat than Mexico’s lifting of tariffs on U.S. pork. The rally remains limited by worries about the escalating trade war. Treasury Secretary Steven Mnuchin this morning said the proposal to raise tariffs an additional $300 billion of Chinese goods is a least a month away. Also,  he said Presidents Trump and Xi plan to meet at the G20 meetings in Japan on June 28 and 29.  Meanwhile, President Xi Jinping said in comments carried by state media on Wednesday said China is on the new long march as the country must overcome various major risks and challenges from home and abroad.

Cattle:  August live cattle futures closed down 40 cents today, while the June contract lost 27 1/2 cents. Both contracts closed nearer their daily lows in a quieter trading session. Feeder cattle futures closed down 47 1/2 cents in the August contract. Gains in the futures markets continue to be squelched by recent weakness in the beef market and expectations for steady-to-lower cash cattle trade this week. Boxed beef prices today did see Choice grade quoted $1.01 higher and Select steady, on movement of 83 loads.Feeder cattle futures remain under pressure from lower prices in the deferred live cattle futures prices and the rally in corn prices recently. The average trade estimate for Friday’s USDA Cattle on Feed Report has the number of cattle on feed as of May 1 at 102.9% of a year ago. Placements in April are projected at 113.0% and cattle marketed in April expected at 106.6% of a year ago.

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