After the Bell: Grains End Mixed But Near Session Highs; Livestock Surge Again

Posted on Tue, 03/24/2020 - 14:45

Corn: May corn futures closed up 3 3/4 cents at $3.47 1/4 and December corn was up a penny at $3.65 1/4. Prices finished nearer the session highs. Short covering was featured in the futures today after prices last week notched contract lows. Buyers were also encouraged today by the second day of limit-up cattle futures trading that is prompting ideas of increased feed demand that includes corn. In fact, some veteran analysts are thinking USDA may have to increase its domestic feed use forecast. The March 31 USDA Grain Stocks Report will be the next measuring stick of feed use. However, corn bulls cannot get too excited as the past two weeks have seen major ethanol demand destruction as wholesale gasoline futures prices are trading around 50 cents a gallon.  

Soybeans: May soybean futures prices closed up 2 3/4 cents at $8.86 3/4 today. Prices closed near the session high and touched a two-week high today. May soybean meal futures closed down $1.50 at $332.10 on a normal corrective pullback after hitting a nine-month high on Monday. May soybean oil futures gained 41 points today to close at 26.55 cents. Short covering and bargain hunting were featured in the soybean market again today. Bulls were impressed that Monday’s solid gains were held and even added to a bit today, on what could have been a “Turnaround Tuesday” that is not uncommon in grain futures trading. Ideas of better feed demand and a rising soybean crush trend recently are working to lift the soybean and meal markets.

Wheat: Wheat closed mixed and near session highs. May SRW futures fell 1 cent to $5.61 1/2 and May HRW rose 1 1/4 to $4.90 3/4. May spring wheat futures rose 4 3/4 cents to $5.35. Wheat futures saw profit-taking a day after prices surged 4% to a one-month high, fueled by milling demand as consumers stayed home to avoid the coronavirus and stockpiled bread and flour. Additional pressure on Tuesday stemmed from improving crop ratings for winter wheat in several U.S. Plains states that bolstered yield prospects. Weekly USDA wheat ratings improved across southern U.S. Plains states. In Arkansas, where farmers grow SRW wheat, the USDA rated 43% of the state's wheat in the top two categories, up from 39% a week earlier.

Cotton: Some buying finally returned to the cotton market today, though some warn this could simply be a oversold bounce. Futures settled mid- to high-range with gains of 74 to 191 points. Deferred months were the leaders to the upside. Cotton futures got a lift from gains in the equities markets today amid optimism lawmakers would soon reach a deal on a massive coronavirus aid package and in response to the Federal Reserve’s latest efforts Monday to shore up the economy. Some support may also have stemmed from news India would go on lockdown for the next three weeks, starting tomorrow. India is one of the top buyers of our cotton, but it is also a major competitor on the export front. Thus, any related disruptions could bolster U.S. shipments of the fiber

Hogs: Lean hog futures finished $1.175 to $2.05 higher through the December contract, which was midrange in many of the contracts. Given the lack of a limit-up close today, the daily trading limit reverts back to $3 for Wednesday’s session. Followthrough corrective buying and spillover from limit gains in the cattle market supported hog futures today. Fundamental support came from rising cash hog bids as the national average direct price firmed another 87 cents this morning. But with April hogs finishing $2.445 above where the cash index will be quoted tomorrow (for March 23), traders may let the cash market catch up before aggressively extending the front-month contract. Some “China premium” that was wiped out on the fear-based selloff is being rebuilt into deferred contracts amid expectations shipments to China will aggressively ramp up after the coronavirus disruptions pass.  

Cattle: June cattle rose $4.50 to $97.025 and April Feeder cattle rose $6.75 to $130.075. Cattle and feeder cattle futures closed up their expanded trading limits for a second straight day and daily limits will remain $4.50 in live cattle and $6.75 in feeder cattle again on Wednesday. Two weeks ago, the cash market was following futures. This week those trends reversed and record beef market gains back to levels in 2017 are boosting bullish futures price action. April cattle could reach $119.65 by Friday if the market closes limit up every day this week.  Direct cash cattle trade is relatively quiet today. Asking prices are firm at $125 in the south, up from around $110 last week.