After the Bell | May 27, 2021
Corn: July corn surged the 40-cent daily limit to $6.64 1/2 and December allied 34 1/4 cents to close at $5.55. Corn led a sharp rally across the grain and soy complex, driven in part by strong export demand, rumors of new Chinese buying and drier midday forecasts for the western Corn Belt. Cash Gulf basis bids remained firm, underscoring the tight supply situation. After the washout earlier this week, the rally ran into little fresh selling today, allowing prices to soar the daily trading limit. USDA reported net corn sales for the week ended May 20 rose to 555,900 MT for the 2020-21 marketing year, double the level from last week. But the surprise was China bought 168,000 MT, including 66,000 MT switch from prior sales to unknown destinations. That buying eased early week fears that China is cancelling or rolling sales. For 2021-22, net sales of 5.69 MMT were almost entirely the result of China purchases. USDA’s daily export report announced 152,400 MT of new-crop sales to unknown destinations.
Soybeans: Soybean futures ended sharply higher, with July up 33 1/2 cents at $15.37 a bushel and November soybeans up 31 1/4 cents to $13.78 1/4. July soymeal rose $6.50 to $393.30 per ton and July soyoil up 113 points at 66.81 cents. The soy complex joined a rally across the grain markets driven by a technical recovery from sharp declines earlier this week. Volatility remains high as the market is amidst competing bullish and bearish forces, with Midwest crops off to a quick start against an outlook for supplies to remain tight through the 2021-22 marketing year. Weekly export sales data for soybeans were generally in line with trade estimates. Old-crop soybean sales were light at 55,900 MT, which isn’t surprising since Brazil is dominating the global export market for now. New-crop sales were just 248,300 MT, at the low end of traders estimates for 225,000 to 600,000 MT.
Wheat: July SRW wheat closed up 27 3/4 cents at $6.76 1/4 today. July HRW wheat closed up 27 1/2 cents today at $6.26 1/4. Prices closed near the session highs today on short covering after hitting a six-week lows on Wednesday. July spring wheat jumped 36 1/2 cents to $7.17 1/4. The wheat markets today saw support from sharply higher to limit-up gains in corn futures, solid gains in soybeans and from the lowest initial USDA spring wheat condition rating since 1988. Rain and snow in the Northern Plains may be too light to provide much improvement this week. Canada wheat regions will also need follow-up rains amid ongoing drought conditions. Key for the wheat markets will be Friday’s price action. If good follow-through price strength is seen Friday, then that suggests price action this week put in near-term market bottoms.
Cotton: July cotton futures closed up 17 points at 82.61 cents today. December futures gained 23 points at 83.46 cents. Today’s meager gains in the cotton futures market are a bit worrisome for the bulls, as the grain futures markets today posted strong gains. USDA today in its weekly export sales report showed U.S. cotton net sales of 171,200 running bales (RB) for 2020/2021 were up 59 percent from the previous week and up noticeably from the prior 4-week average. Increases were primarily for China (42,800 RB), Pakistan (39,500 RB) and Vietnam (21,900 RB). For the 2021/2022 marketing year, net sales of 92,400 RB. Exports of 323,500 RB were down 6 percent from the previous week and 9 percent from the prior 4-week average.
Hogs: Lean hog futures ended mixed with the June through August contracts 22 1/2 to 45 cents higher, while the October and December contracts finished 30 and 32 1/2 cents lower, respectively. Summer-month hog futures were supported by continued strength in the cash and product markets. The national direct cash hog price firmed $3.86 this morning, while the pork cutout value was $1.60 higher at midday. Longer-term, hogs remain underpinned by strong pork demand and the recent sharp drop in corn and meal prices. Export demand was also price-supportive. USDA reported net sales of 45,900 metric tons of pork for the week ended May 20, up 56% from the prior four-week average. China was the buyer of 9,649 MT of U.S. pork and took shipment of 13,500 MT during the week.
Cattle: August cattle inched 10 cents higher to close at $119.425 while October live cattle futures rose 55 cents to $124.175. August feeder cattle futures tumbled $2.20 to $152.85. Cattle futures rebounded from midsession losses to closed slightly higher. The midday wholesale beef trade showed stronger prices, with Choice up 75 cents and Select gaining 17 cents. Sales were moderately active and USDA call demand good for light offerings. Beef demand the past year has proven stronger than expected and bearish traders are now reconsidering ideas that a normal seasonal peak will lead to a sharp drop in wholesale prices later this summer. Supplies will be rising so some decline is expected, but it may not be as large and that may lend support to the cash markets which continue to look undervalued relative to the beef market.