After the Bell: Grain and Soy Markets Slump after Weekend Rains

Posted on 08/19/2019 2:49 PM

Corn: Nearby futures prices lost around 6 cents today and finished nearer their daily lows. Rains fell across much of the Corn Belt over the weekend, including some of the driest areas. Still, reports of many unplanted fields and some low yield reports from Day 1 of the Pro Farmer Midwest Crop Tour likely limited what would have been stronger selling pressure today. Follow along with updates on our website or by searching #pftour19 on Twitter. Look for preliminary route reports from Tour leaders in “Evening Report” today. The U.S. inspected 510,334 MT of corn for export the week ending Aug. 15. That was roughly half last year’s total for this week and below expectations, reminding of the corn market’s demand struggles.

Soybeans: Soybean futures softened as the day progressed and the market finished 11 ½ to 13 ¼ cents lower on the day. Rains over the weekend weighed more heavily on the soybean futures market given the fact that August is typically the most important month in terms of development for the crop. Scouts on our crop tour are getting a first-hand look at crops this week. Lagging maturity, short beans and wide ranges of pod counts are early themes. We’ll release final tour results for Ohio and South Dakota tonight. Weekly export inspections were up notably from year-ago and stronger than expected, but the overall pace of commitments is still more than 20% behind year-ago levels.

Wheat: Wheat futures also faced pressure throughout the day. SRW was the leader to the downside and finished 4 ½ to 5 ¼ cents lower. HRW posted losses around 3 cents. And spring wheat futures finished around a penny lower following a quiet day of trade. Wheat futures continue to struggle to buck bearish sentiment, with losses in the corn and soybean market doing little to improve attitudes. Exports have been mildly supportive, but there’s plenty of wheat to go around on the global market and U.S. prices must remain low to compete. Spring wheat harvest is underway.

Cotton: December cotton futures closed down 89 points at 59.24 cents today, near the daily low. Rallies in global stock markets to start the trading week provided no support to the cotton market today, as it appears worries about slowing global growth in the coming months (suggesting less demand for cotton worldwide) are outweighing the bounces in equities markets the past two sessions. White House Economic Adviser Lawrence Kudlow confirmed the possibility Sunday of holding trade talks with China in the U.S. to help ease fears of a spiraling trade war between the two countries. But Kudlow also said China’s response to protests in Hong Kong could affect the outcome of the discussion. He said American and Chinese negotiators will speak in the next week or 10 days.

Cattle: August live cattle futures closed up 27 ½ cents at $100.20, with October live cattle gaining 17 ½ cents at $98.225. November feeder cattle futures closed up 15 cents at $132.90. Corrective short-covering was featured in the cattle market to start the trading week, after strong losses suffered last week. As we reported late last week, the futures market has likely overdone it on the downside in reacting to the Tyson Foods processing plant fire. Surging beef product prices last week also helped to support futures today, although beef cutout values were mixed today. Packer profit margins are also soaring thanks to rising beef prices and falling cash bids. LLC reports packers are earning $378.25 a head, a $221.55 surge from week-ago.

Hogs: Lean hog futures enjoyed some corrective short-covering today that helped take back the bulk of Friday’s losses. Futures settled $1.02 ½ to $2.07 ½ higher on the day, with nearbys leading gains. Hog futures slumped Friday amid renewed supply concerns, but the market has likely overdone it to the downside. African swine fever in China (and other Southeast nations) is creating a need for imports, which will either directly or indirectly benefit the U.S. But this has been slower to develop than the market wanted, which led to a dramatic selloff. Seasonals would typically point to softer prices heading into fall, but this market has consistently bucked seasonal norms.  

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