After the Bell: Corn Tumbles on No Immediate Weather Threat, Slower Exports

Posted on Thu, 06/25/2020 - 14:42

Corn: July corn futures closed down 7 cents at $3.17 1/4 today and hit a six-week low. December corn fell 5 3/4 cents to $3.28 and hit a contract low. Today’s bearish price action is ominous for the corn futures market, likely prompting the big, speculative fund traders to increase short positions in the near term, especially as weather forecasts signal fewer chances for a blocking ridge to develop over the Midwest after rains later this week. USDA’s weekly export sales report this morning showed old-crop U.S. corn sales of 461,700 MT, up 29% from a week ago but 11% below the four-week average. China did buy one cargo of U.S. corn last week, but total sales were disappointing and a sign that South America exporters are becoming more competitive. New crop sales totaled 77,000 MT.  

Soybeans: Soybean futures faced pressure throughout trading session, but the market was able to work back to a high-range close with losses ranging from 1 cent in the August contract to 3 cents in spring 2021 contracts. Another day passed without a daily soybean sales announcement from USDA, which again has traders concerned about whether China will followthrough on its purchase commitments, despite high-level assurances big purchases are coming. In addition, soybean export sales of 601,900 MT for 2019-20 and 560,700 MT the week ending June 18 were in the lower half of the range of expectations, with new-crop sales down notably from last week. Soybean exports were also down 19% from the prior four-week average at just 302,400 MT. Besides tense relations with China, the market is also noting that South American supplies are increasingly competitive with U.S. supplies.

Wheat: SRW wheat futures finished mixed to mostly firmer. HRW contracts posted losses of a penny-plus to 3 cents. HRS futures ended mostly 4 to 5 cents lower. SRW wheat futures were boosted by corrective buying today as traders covered short positions and unwound short SRW/long HRS spreads. Traders also added to long wheat/short corn spreads, despite the wide premium SRW contracts hold to corn futures. The December SRW/December corn spread pushed out to $1.67 1/4 on the close, though it was over $2 about two months ago. Weekly wheat export sales were in line with expectations at 518,700 MT. China took delivery of 92,200 MT of U.S. wheat during the week but was not a buyer.  

Cotton: July cotton futures closed up 15 points at 61.81 cents and December futures gained 49 points to close at 59.70 cents. The cotton market bulls are showing resilience late this week, even as world stocks sputtered to their lowest levels in over a week on Thursday, as a surge in U.S. coronavirus cases and an IMF warning of a nearly 5% plunge in the global economy this year hit the stock market bulls. However, if the world stock markets continue to erode, cotton futures prices are likely to follow suit. Prices are likely to move mostly sideways Friday and Monday, as traders await next Tuesday’s USDA U.S. cotton acreage update. Spotty showers in Texas this week have provided few benefits and drought there is expanding.

Hogs: August lean hog futures rose 7.5 cents at $51.325 today and closed near mid-range as the bulls try to stabilize the market after it hit a contract low on Monday. Trading was quieter today ahead of this afternoon’s USDA’s pig crop report.  Pork cutout values rose 38 cents at noon Thursday on more modest movement of 162.97 loads. USDA reported this morning that U.S. pork export sales fell 38% from the previous week but were still 3% higher than the four-week average. Shipments fell 10% below the prior four-week average. China was the biggest buyer after Mexico, and the larger destination for U.S. pork last week. Lean hog futures price rallies have struggled this week after China stepped up inspections of meat imports and demanded shippers from all origins of meats, food and grains to certify that those shipments are free of the coronavirus. The development is somewhat disquieting in there may be no science to support the request.  

Cattle: Live cattle ended mixed and near midrange and feeders were slightly higher. August live  cattle fell 27.5 cents to close at $96.075 and August feeders were up 32.5 cents at $133.25. Another choppy session without much direction. The market found early support from improving export sales data. Beef export sales and shipments last week rose to the highest since January, a sign that beef prices have reached levels that are uncovering demand. China was a very small buyer of U.S. supplies. Meanwhile, Chinese trade data showed the country’s beef imports for the first five months of the year are up 46% from year-ago. The country did not provide a breakdown by origin. Daily wholesale beef sales have been showing increasing grocer demand. However, boxed beef prices were lower at midday.  Choice cutouts were $1.75 lower at $207.94 and Select was $1.11 lower at $200.58.