After the Bell | July 13, 2021
Corn: Corn futures settled 6 to 8 1/4 cents higher through the July 2022 contract. The soon-to-expire July contract finished more than 70 cents off its intra-day high. New-crop contracts finished in the upper end of today’s range but 5 to 6 cents off session highs. There were some fireworks in July corn futures, which expire on Wednesday, as there was an apparent short squeeze on at least one trader that needed to get out of a short position. More fireworks ahead of tomorrow’s expiration can’t be ruled out, but the fact futures fell so far from their intra-day high suggests the squeeze play is likely over. The sharp intra-day price movement in the July contract had nothing to do with fundamentals.
Soybeans: November soybeans closed up 1 1/2 cents at $13.51 3/4 a bushel today. December soybean meal closed down $2.50 at $360.00. December bean oil closed up 112 points at 63.48 cents today and closed at a four-week high close. Solid gains in soybean oil futures today worked to support the soybean futures market, but more weakness in the soybean meal futures market limited beans’ upside. Weather in the Corn Belt remains overall bearish for soybeans for the near term, but the critical growing month of August is still two weeks out. World Weather Inc. today said unsettled weather will continue in the U.S. Midwest for the coming five days, adding more rainfall to areas that have already been receiving some rain periodically. Warmer temperatures will impact much of the Midwest next week and to end the month. Warmer weather in the western Corn Belt and upper Midwest will slowly decrease soil moisture and raise stress in the driest areas.
Wheat: December SRW wheat closed down 4 1/2 cents at $6.42 3/4 today. December HRW wheat closed down 3 1/4 cents today at $6.22 1/2. Prices closed near mid-ranges today. Spring wheat futures rose 4 1/2 cents to $8.61 3/4. More gains in spring wheat futures today helped to limit the downside in winter wheat futures, including big gains in July spring wheat that may be due to a “short squeeze” amid declining open interest in that soon-to-expire contract. Trader focus remains on the severe deterioration of the U.S. spring wheat crop. Said World Weather Inc. today: “Canada’s Prairies, North Dakota, parts of Montana and northern Minnesota are facing ten days of very stressful conditions. Little to no rain and warm to eventually hot temperature are expected. Crop stress is already at serious levels and the lack of rain and continued very warm to hot temperatures will accelerate crop yield losses for spring wheat.”
Cotton: Cotton futures settled 12 to 30 points higher through the May contract. Cotton futures ended above the opening level and high-range for a third straight day. Cotton futures were supported by strength in the corn, soybean and crude oil markets, though a firmer U.S. dollar index limited buyer interest. The mixed signals from outside markets kept cotton futures hemmed in a relatively tight trading range.
Hogs: The expiring July hog contract slipped 22 1/2 cents to $112.25 at Tuesday’s close, but most-active August futures leapt $1.85 to $105.925, building upon Monday’s strong advance. Monday’s jump by the July contract as it closes in on its Thursday expiration strongly suggested industry insiders knew packers would be paying up for hogs this week. Indeed, after declining for several weeks, the CME lean hog index is expected to jump 57 cents to $110.67 tomorrow. The industry clearly sees it rising strongly over the next two days as well. The fact that August futures followed Monday’s jump with another surge today indicates traders expect more of the same beyond this week.
Cattle: Live cattle futures continued their Monday surge today, with that strength pulling feeders upward despite concurrent corn gains. August cattle jumped $1.925 to $121.75, while August feeders advanced 67 1/2 cents to $158.825. Fed cattle futures built upon Monday’s modest rally, despite another drop ($1.69) in choice beef cutout, which was stated at $273.21 per cwt. at noon. The most likely driver of the futures gain was news that packers had paid an average of $124.69 a cwt. for the few cattle that changed hands yesterday. And while those animals will almost surely represent only a small portion of this week’s cash trading, the fact that packers paid almost 70 cents more on Monday strongly suggests they need cattle and will be paying even more for them before the weekend.
