After the Bell | Aug. 17, 2021

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Corn: December corn futures closed the day down 5 1/4 cents at $5.63 1/2 and nearer the session low. Some profit-taking from the shorter-term futures traders was featured today, after last week’s gains. Solid losses in the wheat futures market today also spilled over into selling pressure in the corn market. Keener risk aversion in the general marketplace this week—due to the surge in the new Covid variant in many countries, including the U.S., and the chaos in Afghanistan—limited speculator buying interest in the grains today. A solid rally in the U.S. dollar index today was also a negative element for the grain markets. Corn and soybean traders are anxiously awaiting the day two results of the Pro Farmer Crop Tour, which includes the states of Nebraska and Indiana. Scouts on the first day of the tour found a much lower average corn yield in South Dakota but Ohio saw the average yield up sharply from last year and the three-year average.

Soybeans: November soybeans closed down 6 3/4 cents at $13.61 1/2 today and near the session low. Prices scored a technically bearish “outside day” down on the daily bar chart today. December soybean meal futures closed up $0.40 at $362.90 today and December bean oil lost 82 points at 62.12 cents. The soybean market fell in sympathy with the corn and wheat futures markets’ losses today. Profit taking from recent gains was featured. Limiting the downside in soybeans today, compared to corn and wheat, was another USDA daily U.S. soybean sale announcement today--198,000 MT to China and 132,000 MT to unknown destinations. Good rain chances in much of the Corn Belt in the coming days also kept the bulls timid today. Day one Pro Farmer Crop Tour soybean pod counts in a 3’x3’ square came in at 996.9 for South Dakota, which compares with 1,250.9 pods last year and 1,036.1 pods for the three-year average. Pod counts were 1,195.4 for Ohio, compared to 1,155.7 pods last year and 1,056.0 pods for the three-year average. Indiana and Nebraska are on tap for results to be published later this evening.

Wheat: December SRW wheat closed down 26 1/2 cents at $7.48 1/2 today and December HRW futures were down 20 cents at $7.29 1/4. Spring wheat futures settled 19 1/2 cents lower at $9.07 1/2. Today’s solid losses in the winter wheat futures can be attributed to routine profit-taking from the shorter-term speculative futures traders. No chart damage was inflicted today but the wheat market bulls do not want to see good follow-through selling pressure on Wednesday that could produce some near-term technical damage. USDA Monday said 58% of the U.S. spring wheat crop has been harvested. The rapid harvest pace in spring wheat may have added downside pressure in the futures markets today. The stronger U.S. dollar index today and a sell-off in the U.S. stock market were negative “outside markets” for wheat futures today.

Cotton: Cotton futures rose 59 points to 94.90 cents per pound at Tuesday’s close. However, the setback from the intraday high at 96.71 suggested the market is losing its upward momentum. Monday’s USDA Crop Progress report didn’t help the bullish cause, since it showed the “good” to “excellent” reading for the U.S. cotton crop rising two points to 67%. Having the Texas “good” to “excellent” reading rise 1% to 65% also emphasized the fine shape of the current crop. The market may have gained underlying support from early energy complex losses, since that implied the cost of competing synthetic fibers might also rise, but the intraday crude reversal probably undercut cotton bulls. Ultimately, the cotton market is still relying upon vigorous demand to power gains. Whether those will persist remains open to question.

Cattle: Expiring August cattle futures slipped $0.225 to $123.30, while most-active October declined $1.00 to $128.125 Tuesday. Futures dipped despite another big surge in wholesale beef prices, as exemplified by Choice cutout jumping $5.76 rise to $335.56 per hundredweight. That left it within striking distance of its early-June peak at $340.55. Traders seem to be becoming increasingly aware of the huge disparity between wholesale and farm level prices. They were likely thinking that after the controversy raised by the spring difference, packers would be more willing to boost fed cattle bids during the current wave of wholesale gains. That would at least partially explain the losses suffered by the deferred contracts. Steer weights indicate feedlot marketings aren’t terribly current, which decreases the cattleman’s bargaining power.

Hogs: After rising dramatically Monday, hog futures gave back a portion of those gains today. Nearby October lean hog futures fell $1.10 to $87.90 per hundredweight. The preliminary quote for the CME Lean Hog Index slipped just 3 points to $109.64, which probably limited futures losses, since that suggested the short-term pace of seasonal losses is not going to be particularly large and reminded traders of the great disparity between cash and futures quotes seen currently. Pork cutout values continued fluctuating wildly today, with a $37.72 leap (to $263.85) in pork belly values largely powering an $8.15 surge in midsession pork carcass prices. Those gains were almost surely mitigated in afternoon activity, but the late-afternoon report will likely indicate another big wholesale jump. Greatly elevated beef prices could power active substitution demand for pork during the coming weeks.


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