After the Bell | July 21, 2021

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Corn: December corn rose 2 3/4 cents to $5.68 1/2 per bushel, while September was unchanged at $5.71 3/4. Weather concerns have reemerged as a bullish factor, as the latest forecasts suggest the heat and dryness that has just returned to the Corn Belt could continue dominating the region into August. Recent rains and cooler temperatures likely increased fall harvest prospects in the eastern Corn Belt, but persistent drought conditions elsewhere could limit the size of the crop. The increased threat to the soybean crop, for which August is the critical period, may also be spurring corn buying. In addition, the ag sector may have gotten a boost from a 4% rally in crude oil futures, suggesting higher prices for ethanol, biodiesel and related products.

Soybeans: November soybean futures rose 1 1/4 cents to $13.89 3/4 a bu. August soybean meal futures rose $4.30 to $369.80 per ton and August soybean oil futures fell 156 points to 65.46 cents. Soybean futures faded from overnight gains on spillover from the soyoil market, which came under pressure after Argentina approved a law to reduce the amount of soyoil blended in its biodiesel. Soymeal also got a boost from spreading activity. Argentina’s new law will lead to an increase in the country’s soyoil exports and pressure international prices, industry officials said earlier this week. Persistent dryness in top U.S. growing states remains a concern as the soybean crop nears pod-setting and fill in August. Warmer temperatures and infrequent rain the next two weeks “will lead to significant drying in much of the Midwest and stress to crops will increase from the eastern Dakotas and northeastern Nebraska into Minnesota and northern Iowa where yield potentials should decline,” World Weather said.

Wheat: September SRW futures rose 10 1/4 cents to $7.10 3/4 a bushel, the contract’s sixth consecutive daily gain and highest settlement since $7.22 3/4 on May 12. September HRW rose 8 1/2 cents to $6.68 3/4. September spring wheat fell 18 1/4 cents to $8.97 3/4, its first close below $9 in four sessions. HRW and SRW futures extended a week-long upswing, supported by spreading activity against corn, easing U.S. harvest pressure and talk of harvest shortfalls in other top wheat producing countries. Spring wheat pulled back from contract highs reached Monday, though severe dryness and heat in the Northern Plains growing region underpinned the market. “No relief is expected in Canada’s Prairies and the U.S. northern Plains will see a new round of declining crop conditions over the next week to nearly 10 days,” World Weather said.

Cotton: Most-active December futures gained 18 points to 88.59 cents per pound. Prospects for the fall cotton crop seem quite good, especially after the weekly USDA Crop Progress report boosted the “good” to “excellent” readings as of July 18 by four percentage points to 60%. Yet, futures rebounded strongly yesterday from Monday’s energy-led breakdown and sustained gains today. Vigorous export demand has consistently supported the cotton market in recent months, so, despite an historical tendency for weak customer buying in mid-summer, traders seem unwilling to give up on that strength at this juncture. Bulls were likely disappointed by Wednesday’s lack of reaction to the rebound in crude futures, and are looking toward tomorrow’s USDA export sales report for market direction. 

Hogs: Lean hog futures rose 80 cents to $1.575 through the December contract, with October rising $1.375 to $92.40, the highest close since mid-June. August futures were supported by a strengthening cash market and the contract’s discount, currently nearly $6, to the CME cash index. The product market also continues to strengthen, which is boosting packer margins. The pork cutout value firmed another $2.83 this morning, though a surge in ham prices accounted for nearly all of the price gain, so the full-day price may weaken. The pork cutout value at its highest level since the peak in early June given strong demand for pork. Some focus tomorrow will be on USDA’s export sales data, specifically weekly sales and exports to China.

Cattle: Live cattle futures finished 27.5 to 65 cents higher through the February contract, with August settling at $120.05. Feeder cattle posted gains of $1.125 to $1.525 through the January contract, supported by early weakness in the corn market. Futures are trading at sizable premiums to the cash index, indicating traders expect buyer interest for feeder calves to increase. Live cattle futures firmed despite a softening tone in the cash cattle market. Cash trade weakened to around $119 in the Southern Plains, down from a light test around $120 earlier this week and about $1 lower than last week’s trade in this region. Cash trade in the northern market also softened from earlier this week and week-ago. Traders await Friday’s Cattle on Feed and Cattle Inventory Reports. July 1 feedlot inventory is expected to be down about 1% from a year earlier and the total U.S. cattle inventory to be down around 0.5%.

 

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