After the Bell | July 27, 2021

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Corn: Futures were unable to hold onto earlier gains and finished low-range with fractional to penny losses through the July 2022 contract. December futures fell 1/2 cent to $5.46 1/4 a bushel. Corn futures were supported overnight and through much of the morning by the one-point downtick in USDA’s crop condition ratings Monday afternoon and hot, dry forecasts. But buyer interest faded late, resulting in a disappointing finish for bulls. Recent price action suggests bulls are going to need a sharp decline in crop ratings and/or another catalyst to recharge buyer interest. The demand side of the market isn’t encouraging fresh buying. While ethanol production numbers signal USDA’s forecast is too low on that category, it has likely overstated old-crop exports. And while new-crop sales are running well ahead of year-ago and the five-year average, foreign buying has slowed, especially sales to China for the 2021-22 marketing year.

Soybeans: November soybeans closed up 1 3/4 cents at $13.59 1/2 a bushel. December soybean meal closed up $6.10 at $361.20 per ton. December soybean oil futures fell 116 points to 62.91 cents. Soybean futures bulls did not get much traction today after USDA Monday afternoon surprisingly dropped its crop condition ratings by 2 percentage points, or by ongoing concerns about dry and hot conditions in parts of the Corn Belt as the soybean crop approaches its critical development period in August. USDA rated 58% of U.S. soybeans “good” to “excellent” as of Sunday, down from 60% a week earlier and 72% for the same period a year earlier. World Weather today reported the U.S. northern Plains and northwestern Corn Belt will continue a dry bias during much of the coming 10 days to two weeks, with a few showers and thunderstorms.

Wheat: December SRW wheat fell 2 1/2 cents to $6.84 1/4 a bushel. December HRW wheat closed up 2 1/4 cents at $6.52 3/4. Spring wheat futures edged up 3/4 cent to $8.68. Spring wheat futures have been leading strength in the wheat complex recently but came off the daily highs as today’s trading session progressed. USDA’s spring wheat crop condition ratings fell to the lowest level since the 1988 drought. Spring wheat was rated 9% “good” to “excellent,” down two points from one week-ago, with 66% of the crop now rated “poor” to “very poor,” up from 63% a week ago, USDA said Monday. USDA also reported the U.S. winter wheat crop was 84% harvested as of Sunday, up from 73% a week earlier and slightly above analyst expectations. Buying interest in winter wheat was limited today as the U.S. harvest progresses, adding supply to the market and seeing commercial hedge pressure.

Cotton: Cotton futures settled 45 to 65 points higher through the July 2022 contract, with most-active December rising 63 points to 90.23 cents per pound, a new closing high for the contract. Cotton futures were supported by strength in grain and soybean markets and weakness in the U.S. dollar, which mitigated bearish the impact from improvement in USDA’s cotton crop ratings. The U.S. dollar index fell to the lowest level in nearly two weeks, bolstering beliefs cotton will be more affordable for foreign buyers. USDA’s weekly crop progress report yesterday showed 61% of the crop rated either “good” or “excellent” as of July 25, up slightly from 60% a week ago and 49% a year ago. About 37% of the crop was setting bolls, up from 23% the previous week but behind the five-year average of 42% for that date.

Hogs: August futures reached a six-week high at $108.125 before posting a mid-range close at $107.475, up 7.5 cents. October through contracts fell 27.5 to 62.5 cents. Wholesale pork values continued marching higher this week, with cutout values rising $2.74 to $215.77 at midday, USDA reported. Solid gains in the other cuts were modestly offset by a drop in pork belly quotes. History suggests the seasonal hog/pork strength will extend into next week, but the risk of a seasonal downturn will increase significantly beyond that point as the belly market often peaks in early August and hog slaughter begins its seasonal acceleration toward late-year highs. Traders may be worried about getting caught on the wrong side of the market if/when that downward turn commences. Late pressure today may have stemmed from a 16-cent drop in the CME Lean Hog Index, to $112.06.

Cattle: August live cattle fell 52.5 cents to $122.925 per hundredweight, while August feeders settled $1.50 lower at $160.70. Cattle futures couldn’t sustain Monday’s bullish response to the Cattle and Cattle on Feed reports, which indicated supplies of cattle coming to market over the short-to-intermediate term is likely to fall short of prior expectations. This week’s early wholesale action was also quite supportive of short-term price prospects, with yesterday’s $1.30 rise in Choice cutout being followed by a $2.72 advance today. However, futures traders clearly couldn’t sustain the upward momentum, as indicated by the midsession reversal and low-range closes in the nearby contracts. 


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