After the Bell | Aug. 19, 2021
Corn: December corn futures closed the day down 14 1/4 cents at $5.50 3/4 today and nearer the session low. Keener risk aversion in the general marketplace this week and significantly bearish “outside markets” Thursday hit the grain markets hard. The U.S. dollar index was solidly higher and at a 10.5-month high, while crude oil prices were sharply lower and hit a 2.5-month low. Rains forecast for the dry northwest Corn Belt were also bearish for corn today. World Weather Inc. today said net drying is expected in the heart of the central and eastern U.S. Midwest for a while in this coming week. Some of the northwestern rain will spread across the Midwest this weekend and next week. Cooler weather is expected in the Corn Belt next week. “The milder conditions will conserve soil moisture and help maintain relatively good crop conditions, despite low soil moisture in some areas, “said World Weather. The Pro Farmer Crop Tour remains in focus for traders. Full results for Iowa will be released tonight, as well as Minnesota. Today’s weekly USDA export sales report showed 216,500 MT in U.S. corn sales for the 2020-21 marketing year, which topped expectations. The 2021-22 marketing year sales of 510,000 MT were in the middle of the forecast range. Exports at 829,200 MT were below recent shipment numbers.
Soybeans: Soybeans were the downside price leader in the grain market sell off Thursday, with November futures closing the day down 33 1/4 cents at $13.20. Weather forecasts for good rainfall across much of the Corn Belt the next few days helped to sink the market, as did the risk aversion and bearish outside markets. The critical soybean-growing month of August is so far turning out to be generally good for the majority of the U.S. crop. Traders continue to monitor the annual Pro Farmer Crop Tour, with traders deeming it as showing no big surprises so far. We will issue U.S. corn and soybean crop estimates on Friday afternoon. USDA today reported still more daily U.S. soybean sales--263,000 MT to China during the 2021/2022 marketing year and sales of 148,590 MT to Mexico during the 2021/2022 marketing year. The weekly USDA export sales report showed old-crop U.S. soybean sales at 67,700 MT. New-crop sales of 2,142,100 MT topped market expectations. Shipments of 258,000 MT also topped recent numbers.
Wheat: Wheat futures followed the corn and soybean markets today, with December SRW closing down 8 1/2 cents at $7.42 3/4 and December HRW wheat futures down 8 1/2 cents at $7.28 1/4. Spring wheat futures settled 6 1/2 cents lower at $9.04 1/2. Look for Friday’s price action in wheat futures seeing traders again looking to the soybean and corn markets for direction. Very bearish outside markets Thursday that saw a stronger U.S. dollar (hitting a 10.5-month high) and sharply lower crude oil prices (2.5-month low) also kept the wheat market bulls standing on the sidelines today. Weather forecasts for beneficial rains in the dry northern U.S. Plains and Canadian Prairies in the coming days were also bearish for wheat futures--likely boosting odds for normal plantings and a better early growing season for 2021-22 winter wheat. USDA reported new-crop U.S. wheat sales of 306,700 MT which were at the low end of trade expectations. Weekly shipments of 591,800 MT topped recent export numbers, however.
Cotton: Cotton futures declined in concert with the other crop markets and crude oil Thursday, with most-active December futures diving 2.13 cents to 92.76 cents/pound at the close. The disinflationary tone of the commodity sector, which itself reflects recent negative economic reports, likely added to the selling dominating the cotton market. The weekly USDA Export Sales report didn’t help the bullish cause, although the 2021-22 sales and shipments figures at 242,400 and 221,100 bales, respectively, weren’t that bad. Technicians almost surely joined the bearish crowd in the wake of Tuesday’s reversal from fresh highs and the market’s inability to sustain rally attempts yesterday. Having December futures close below initial support at their 10-day moving average seemingly bodes ill for Friday’s action as well.
Cattle: Live cattle futures also declined Thursday despite Choice beef cutout pushing to a fresh 2021 high of $341.06 per hundredweight, up 98 cents, at midday. Most-active October fell $0.90 to $128.15, while September feeder futures dropped $0.45 to $162.90. It certainly would have been easy to expect a better performance from live cattle futures later in the day, since the midsession release of yesterday’s 5-area direct cattle report stated the Monday-Wednesday average for fed steers at $126.52, which was $4.17 over the comparable week-prior figure. We have come to suspect the industry is now skeptical of the cash market’s ability to rally substantially after having failed to do so last spring and again here in August while the wholesale market soared to virtually unprecedented highs. Feeders apparently gathered little support from concurrent losses in corn and soybean meal futures, despite the implication of cheaper feed costs in the weeks and months ahead.
Hogs: The hog market wasn’t immune to Thursday’s dominant bearish atmosphere, as indicated by the nearby October lean hog contract’s $2.175 plunge to $86.925. Traders are probably expecting a forthcoming seasonal breakdown in wholesale pork values, especially with soaring beef values seemingly nearing a short-term top. That might help explain the futures drop despite a midsession quote of pork cutout up $8.11 to $127.44. On the other hand, given the huge gains posted by hams (up $33.19) and bellies (up $16.06), industry insiders were almost surely expecting a large portion of those gains to be given back in afternoon pork trading. The Monday-Thursday hog slaughter total reached 1.905 million head today, which fell just 16,000 head (0.8%) below last year’s Covid-inflated result, may have encouraged selling as well, but the weekend total will probably fall far short of the huge totals posted late the same week last year.
