After the Bell | June 25, 2021
Corn: Despite the tight old-crop situation, nearby July corn futures fell Friday, down 16 3/4 cents to $6.36 1/2 in concert with the new-crop contracts as they reacted badly to favorable weather forecasts through late June and to a Supreme Court decision implying less energy industry need for ethanol. December futures tumbled 16 3/4 cents to $5.19 1/4. The two contracts ended the week 18 3/4 cents and 47 cents lower, from last week’s respective closes. The industry will be watching the weather and the latest forecasts early next week to see whether and how much the Corn Belt receives beneficial rains in late June and early July. Plentiful moisture would render plants much less vulnerable to high temperatures and dryness during the critical mid-July pollination period. Traders will then focus closely upon the results of the June 30 Acreage and Grain Stocks reports from the USDA, since the former will have huge implications for the fall harvest, while the latter will offer indications for spring demand and stockpiles going forward.
Soybeans: Soybean futures fell 22 to 41 1/2 cents, led by the July contract. Meal futures finished $1.40 to $4.10 higher. Soyoil posted daily bearish reversals and plunged 292 to 307 points. For the week, November soybeans dropped 43 1/4 cents to $12.69 3/4. Soyoil futures got hammered after the Supreme Court ruled in favor of refineries in their attempt to get exemptions from biofuel blending requirements. We think the initial negative market reaction in corn and soyoil was overdone considering the administration will not likely approve many (if any) additional SREs. Soybeans followed the soyoil market sharply lower. While futures held above last week’s lows, bulls may have to defend that support next week. If the support falters, it would open the door to more aggressive fund liquidation and speculative selling.
Wheat: July SRW wheat futures closed down 14 1/4 cents at $6.37 and December SRW fell 10 1/2 cents to $6.48. For the week, December SRW fell 23 1/4 cents. July HRW futures dropped 5 3/4 cents at $6.00 1/4 and December fell 5 1/4 cents at $6.18 3/4. On the week, December HRW fell 7 1/2 cents. September spring wheat futures today rose 2 3/4 cents to settle at $8.08, up 41 3/4 cents for the week. Spring wheat futures will be in the spotlight again next week after recent solid gains, including more today. September futures surged this week and are poised for a run at the $8.45 3/4 contract high, hit June 7. Meantime, winter wheat futures again today were pulled down by solid losses in corn and soybean futures. Look for price action in winter wheat futures next week to also be significantly influenced by the corn and soybean markets. Focus will also be on weather, especially in the northern Plains.
Cotton: July cotton futures on Friday rose 40 points to 86.43 cents and December futures gained 45 points at 87.18 cents. On the week, December futures rose 200 points. Today’s bullish weekly high closes in cotton futures set the table for followthrough buying interest early next week. Especially impressive in the cotton market this week is that the fiber was able to tack on price gains in the face of slumping grain futures prices. Weather in U.S. cotton country will remain in focus next week. World Weather Inc. reported today that “waves of rain marching toward and eventually through West Texas in this coming week will prove to be extremely well timed and beneficial.”
Hogs: Lean hog futures posted gains of 87 1/2 cents to $1.925 today. But for the week, July hogs plunged another $6.55 to $101.95 and August hog fell $6.925 to $99.775. July hogs closed $13.34 below where the cash index will be quoted on Monday (as of June 24). That’s a huge discount, signaling traders anticipate the cash index will plunge over the next three weeks ahead of the contract’s settlement. While cash prices are falling, we still feel the downside is overdone in futures. With that said, we want to heavy up third-quarter hedges and add fourth-quarter coverage on a corrective rebound.
Cattle: Cattle futures posted a mixed performance ahead of the midafternoon Friday release of USDA’s monthly Cattle on Feed (COF) report but firmed at the close. August cattle rose $0.175 to $122.80 and December futures added $0.525 to $132.225. August feeders led the yearling contracts higher in response to the latest corn losses, surging $2.40 to $159.55. August cattle ended the week $1.75 higher than last Friday, while August feeders gained $4.525 on the week. Fed cattle futures are likely to react well to the COF report results on Monday, with the May placement figure at just 93.1% of the year-ago total, and 2.3% below industry expectations, favoring a stronger opening to the week’s trading.
