After the Bell | August 4, 2021

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Corn: September futures fell 4 3/4 cents to $5.45 3/4 per bushel and most-active December fell 5 cents to $5.46 3/4. Seasonal weakness seemingly dragged the corn market lower as the latest weather forecasts and condition reports indicate no substantial problems standing in the way of a large U.S. corn crop this fall. Corn futures appear vulnerable to further weakness during the weeks ahead. Bullish traders are justified in relying upon the short Brazilian crop this year, but that news has almost surely been incorporated into prices. 

Soybeans: November soybean futures rose 6 cents to $13.25 3/4 a bushel. Soymeal futures rose $4.00 to $5.30, while soyoil dropped 13 to 26 points. Soybean futures were supported by corrective buying, though the market recouped only a portion of Tuesday’s losses. Forecasts continue to call for generally favorable weather for much of the Midwest over the next two weeks, thought the midday GFS model reduced rains in some northern and western areas from previous expectations. Given that August is the critical development month for soybeans, traders will continue to monitor movements in the forecast models. USDA’s weekly export sales data is likely to remind traders of seasonally sluggish soybean demand. For the week ended July 29, traders expect old-crop soybean sales between -100,000 MT and 100,000 MT and new-crop sales between 200,000 MT and 550,000 MT.

Wheat: September SRW wheat fell 7 1/4 cents to close at $7.17 1/4 after rising earlier to the highest level in almost three months. September HRW futures fell 13 1/4 cents to $6.94 1/4 and September spring wheat fell 16 3/4 cents to $9.03. Wheat futures erased early gains as crude oil prices tumbled over 3% on escalating concern a Covid-19 resurgence will crimp overall demand for commodities. But the wheat market remains underpinned by recent demand strength and expectations for smaller harvests from major producers such as France and Russia. Tomorrow’s USDA export sales report is expected to show wheat sales of 250,000 to 700,000 MT for the week ended July 29, based on a Reuters survey of analysts.

Cotton: December cotton futures rose 44 points to 90.31 cents a pound, while March futures rose 43 points to 90.01 cents. Cotton futures rose for the third consecutive day and traded near contract highs reached last week amid a bullish fundamental backdrop, including robust demand, though a selloff in crude oil markets and strength in the U.S. dollar limited gains. Traders await USDA’s weekly export sales report tomorrow for further confirmation of strong global demand for U.S.-grown cotton. U.S. crop prospects are mostly favorable, even with a decline in USDA’s weekly crop condition ratings earlier this week.

Hogs: August lean hog futures finished 40 cents higher, while deferred hogs ended lower, led by a $1.25 loss in the October contract. August lean hogs were supported by the discount the lead contract holds to the cash index. With just seven days until August hogs expire, the contract ended today $2.315 below the cash index will be quoted tomorrow (as of Aug. 3). October hogs retreated today after strong gains the first two days this week. That contract finished $21.665 below tomorrow’s cash index quote. That’s a far greater discount than normal. Over the past five years, the cash index has fallen an average of $6.66 from Aug. 4 to Oct. 18 (the October contract’s settlement date this year). While we expect seasonal pressure to develop, traders have a far too pessimistic outlook, in our opinion.

Cattle: August live cattle futures rose 80 cents to $124.05 per hundredweight, while most-active October climbed 82.5 cents to $128.975, the highest closing price since July 26. October feeder cattle fell 35 cents to $162.875. Wholesale beef prices continued this week’s surge, with choice cutout advancing $2.90 today to $288.74, the 11th consecutive daily increase. Cash trade for slaughter-ready cattle was light, with prices averaging around $124.61, up $3.00 from a week ago. Cattle and beef supplies remain quite plentiful, so this week’s cattle rally probably does not reflect a supply-driven move. Indeed, the latest gains seem almost entirely demand-driven. Seasonal history implies considerable cattle/beef market weakness during mid-summer.

 

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