After the Bell | July 28, 2021
Corn: Futures edged slightly higher Wednesday, with nearby September rising 1 1/4 cent to $5.50 and most-active December settling 2 3/4 cents higher at $5.49. The prospect of persistently hot and dry weather over a sizeable portion of the Corn Belt, particularly in Minnesota and the Dakotas, provided support. The market likely benefitted from strength spilling over from the wheat and soybean markets, particularly the former, since the ongoing spring wheat tour found very poor conditions and yield prospects Tuesday. However, with the bulk of the U.S. corn crop having apparently pollinated with few significant issues, the probability of another large domestic harvest seems likely to limit the market’s upside potential. That seemingly opens the door to seasonal weakness as the fall harvest looms.
Soybeans: August soybeans rose 13 3/4 cents to $14.32 a bushel and November rose 1 1/2 cent to $13.61. Soymeal futures finished $2.70 to $3.10 lower through the December contract. Soyoil posted gains of 29 to 56 points through the December contract, which settled at 63.40 cents. Soybean futures were supported by crop concerns as the crop enters the key development month of August. Hot, dry weather remains a concern in northern and western areas of the Midwest. Concerns aren’t nearly as great in eastern portions of the region, as those states have better soil moisture. USDA’s weekly export sales report tomorrow is expected to show old-crop sales from -100,000 metric tons (MT) to 100,000 MT and new-crop sales between 200,000 MT and 400,000 MT.
Wheat: The wheat complex surged in response to the first day’s results of an industry survey of the U.S. spring wheat crop, with December SRW futures climbing 13 1/2 cents to $6.97 3/4 per bushel, December HRW futures advancing 18 cents to $6.70 3/4 and December spring wheat leaping 22 3/4 cents to $8.90 3/4. The Wheat Quality Council’s first day of scouting the U.S. spring wheat crop found fields averaging a yield of just 29.5 bushels/acre, far below the 45.6-bushel result from 2019 and a five-year mean at 43.3 bushels. Market observers expect the yield results to worsen as the week passes, which probably exaggerated the futures market response. The winter wheat markets followed spring wheat prices higher amid expectations for tighter U.S. supplies in coming months. The industry may also view current wheat prices as being comparatively too low to spur winter wheat plantings in late summer and fall, ultimately leading to tighter conditions in mid-2022.
Cotton: December cotton futures prices rose 29 points to 90.52 cents as the market continued to see support from beliefs the U.S. and global economies will recover from the pandemic. This afternoon’s FOMC statement from the Federal Reserve bolstered those notions as the Fed said the U.S. economy continues to gain strength. Tomorrow’s weekly USDA export sales report will be watched to see if sales and shipment numbers extend recent strength. Cotton market bulls are also encouraged by the solid rebound in the crude oil market recently, after dropping by more than $5 a barrel last week. Prices have rebounded by more than $7 from last week’s low. World Weather Inc. said today the U.S. Delta and southeastern states, along with the Blacklands of Texas, will see a good mix of weather for the next two weeks, supporting most crop needs.
Hogs: August lean hogs fell $1.775 to $105.70 per hundredweight and October hogs fell $3.00, the daily limit, to $89.525, the contract’s lowest closing price since July 19. The price limit will expand to $4.50 for tomorrow’s session. Futures fell sharply amid profit-taking pressure after the market’s rally to six-week highs earlier this week. There appeared to be no fundamental-driven news that triggered today’s selloff, as wholesale pork prices extended recent gains amid stronger retail demand. Carcass cutout values averaged $125.18 early today, up $1.69 from yesterday and the highest since June 17, according to USDA data. Ham prices continued to be one of the primary drivers behind the cutout market strength, posting a jump of $7.24 today. Carcasses on national direct markets early today ranged from $101.58 to $109.14. August lean hog futures remain at a discount to the CME lean hog index, which was at $112.05 for the two days ending July 26, down 17 cents from the previous price.
Cattle: August live cattle rose 15 cents to $123.075 per hundredweight and October live cattle rose 10 cents to $128.525. August feeders fell 52.5 cents to $160.175. Live cattle futures were supported by recent strength in wholesale beef prices and last week’s bullish USDA Cattle on Feed report. Gains in corn prices weighed on feeder cattle futures. Cash cattle markets appeared to be forming a firmer tone today, with average live steer prices at $123.32 in five top U.S. feedlot areas based on negotiated cash sales, according to a midday USDA report. By comparison, live steers averaged $120.77 last week. Choice cutout values early today averaged $272.45, up $2.72 from Tuesday and the sixth consecutive daily gain since the market hit a 3 1/2-month low last week.
