After the Bell: Corn Falls to 3 1/2-Year Lows, Wheat, Soy Slightly Higher

Posted on Mon, 04/06/2020 - 14:53


Corn: Prices fell for a seventh consecutive session, hitting new contract lows. May futures fell 3 cents to $3.27 3/4 and December fell 2 1/2 cents to $3.48 ¼. Futures fell again today on rapidly slowing ethanol production and use, with inventories already at a record as gasoline demand is down 70%. Prices also fell with livestock futures in free-fall, reducing margins and potential demand for corn. Easing shipping and trucking logistics in Argentina offset news that U.S. corn inspected for export rose to a new marketing-year high last week. While the pace of U.S. exports has improved and China has been buying some U.S. corn for old-crop and boosting new-crop purchases, it is not enough demand to change the downward trend.  

Soybeans: May soybeans closed up 1 1/4 cents at $8.55 1/2 today and July gained 1 3/4 cents to $8.61 1/4. May soybean meal fell $6.20 at $297.00 and May bean oil rose 40 points at 26.83 cents. While the soybean futures market saw tepid gains today, bean bulls should be concerned about the very poor price performance in the soybean meal futures market, which has dropped around $25.00 the past week. Meal has been pressured on reports of better shipments out of Argentina, and the funds are also active on the short side of meal. Brazil shipped 3.35 MMT of soybeans last week. Soybeans saw some light support from the surge in U.S. stock indices Monday, amid hopes for a de-escalation of Covid-19 infections and deaths across the globe.  

Wheat: SRW wheat settled midrange and up 5 ¾ to 6 ½ cents; HRW wheat finished low range and down 3 ¼ to 3 ¾ cents. Spring wheat futures settled in the lower half of their daily trading range and up 1 ¾ to 2 ½ cents.  Gains in European and Russian markets overnight helped the wheat market to strengthen during the session, with wheat benefitting from efforts to ensure adequate food supplies amid the coronavirus pandemic and some regions restricting grain shipments and/or encountering logistic problems due to the virus. The latter is of particular note in Russia. Winter wheat futures also got a boost from some freezing temperatures on the Central Plains over the weekend. But the market eventually pared gains on recognition damage was likely pretty minimal.  

Cotton: Cotton futures finished high range with gains of 204 to 221 points through the December contract.  Prices were boosted by general strength in the commodity sector and a strong rally in the U.S. stock market today. While attitudes toward risk-based markets improved today, suggesting maybe investors see a light at the end of the tunnel, it’s too early to say today’s price action was anything more than corrective buying in the cotton market. Follow-through buying will be needed to signal a potential low in the cotton market. Fundamentally, the world must get back to its feet with textile mills ramping up production before cotton futures can embark on a sustained price recovery.

Hogs: April lean hog futures closed up $0.90 at $41.125 today, while June futures gained $1.325 at $49.65. Both contracts finished nearer their session highs after dropping sharply to contract lows early on today. Short covering by speculators was likely featured in the futures market today, as fundamentals remain very depressed. April lean hog futures are presently trading around a $17 premium to the projected CME lean hog index. There are also worries about a slowdown in hog slaughter rates amid record market-ready supplies.  At least one major Iowa processor is reported to be down this week, the first shutdown of a major plant, with others slowing their pace. Pork product prices did rebound today after cutout dropped $16 the past week. Monday’s pork cutout value was up $2.63, led by hams and bellies. Movement was moderately active at 248.11 loads.

Cattle: Cattle futures closed widely mixed with feeders rebounding Monday. June cattle were down $1 to $79.85 and August rose 52.5 cents to $84.825. May feeder cattle rose $1.20 to $109.30. Front-month futures continued to fall to new lows with nearby April closing down the $4.50 limit at $83.825, or $20 below late-week cash prices. It was inevitable that processing plant workforces would show cases of Covid-19, and we’re faced with that today. Some smaller plants have stopped operations, while larger plants are attempting to remain operational but safe for workers. Last week’s slaughter totaled 626,000 head, at least 20,000 smaller than expected and 50,000 smaller than the prior week. Today’s slaughter was down 7,000 head from a week ago. Reports and rumors of which plants are operating, and which are facing high absenteeism will dominate the conversation for several weeks.