After the Bell | August 31, 2021
Corn: Corn joined a broad commodity-sector decline, with the most-active December contract falling 8 1/4 cents to $5.34 1/4, the contract’s lowest closing price since $5.33 on July 12. December corn fell 2% from an end-July close of $5.45 1/4. Recent weather has been conducive to a strong finish for the corn crop across large areas of the Corn Belt, including the northwestern region that suffered from drought through much of summer. That’s opened the door to traditional seasonal weakness as the fall harvest looms. Hurricane Ida didn’t appear to cause major damage to Gulf of Mexico petroleum infrastructure or to crops in the Southeast, contributing to selling pressure. USDA yesterday reported 60% of the U.S. corn crop in “good” or “excellent” condition as of Aug. 29, unchanged from the week prior and slightly better than expected.
Soybeans: November soybeans fell 10 3/4 cents to $12.92 1/2 a bushel, down 4.2% for the month, after the contract closed July at $13.49 1/4. Soymeal futures finished mostly $1.00 to $1.90 lower, while soyoil futures fell 65 to 86 points. End-of-month fund liquidation weighed on soybeans, as funds lightened their long exposure. Fundamental pressure came from uncertainty about the export situation at the Gulf following damage from Hurricane Ida. The market may face selling pressure until traders have a better handle of how much export business will be delayed. Recent rains across the Midwest are fueling beliefs the soybean crop will finish strong. USDA updates its harvest estimates in its Sept. 10 Crop Production report.
Wheat: December SRW wheat fell 1 1/4 cents to $7.22 1/4, erasing most early declines after dropping to a four-week low. The December SRW contract posted a gain of 1.3% for August. December HRW wheat fell 1/2 cent to $7.12. Spring wheat futures fell 6 1/4 cents to $9.03 1/2. Wheat futures absorbed spillover pressure from declines in corn and soybeans but held up relatively well. USDA Monday afternoon reported 88% of the U.S. spring wheat crop had been harvested as of Aug. 29, above the five-year average of 77% for this time of year. Also today, Statistics Canada reported sharply lower wheat production potential this season due to heat and drought in western Canada regions. The group projected durum wheat crop prospects down 39% from the 2020 season at nearly 4 million metric tons (MMT), with spring wheat crop prospects down 38% at 16.10 MMT.
Cotton: December cotton fell 172 points to 92.51 cents today and closed near the session low. Broadly lower grain futures prices stymied cotton market bulls. If the grain futures continue to slide this week, cotton futures may only muster limited price gains, or decline further. End-of-month profit-taking and weak long liquidation were also likely seen in cotton futures. Hurricane Ida is believed to not have significantly damaged most cotton acreage in the South. Heavy rains hit Gulf states, but Texas was spared. USDA’s cotton condition ratings remained solid this week, with 70% of the crop rated “good” or “excellent” as of Aug. 29, down one percentage point from a week earlier. In top-producing Texas, 68% of the crop was rated good-to-excellent. Cotton development continues to lag the norm, with just 86% of the crop setting bolls versus the usual 94% for this time of year, and 21% with bolls open versus the usual 26%.
Cattle: October fell for the sixth straight today, dropping $1.425 to $126.90 per hundredweight, the contract’s lowest settlement since $126.675 on July 22. October feeder cattle fell $1.20 to $16775. Despite relative firmness in cash cattle and wholesale beef values, cattle futures ended August on a bearish note. Price weakness have reflected aggressive fund long liquidation, as well as the eroding wholesale beef market. Traders may be expecting a sustained downtrend in wholesale beef after prices hit a 15-month high last week. Early today, Choice cutout values rose 36 cents to $343.14, down from a 15-month high earlier this week, according to USDA reports. Beef values may have further downside, but historical patterns suggest retailers may be back in the market soon after the Labor Day holiday.
Hogs: October lean hogs fell for a second day, easing $1.35 to $88.80 per hundredweight. December hogs fell 77.5 cents to $81.95. Hog futures took followthrough pressure from a technically bearish close yesterday, compounded by recent softness in the wholesale pork market and expectations for greater supplies this fall. Pork carcass cutout values posted a modest recovery from yesterday’s plunge to two-month lows. Early today, cutouts gained $2.43 to $112.15 per hundredweight, according to USDA reports. That’s still down 17% from the June peak near $135. Other cash fundamentals for hogs appear mixed to bearish, with demand poised to ease after the summer grilling season ends. The latest CME lean hog index fell to $103.49, the lowest since $103.24 on April 15 but still almost $15 above October futures.
