After the Bell: Corn Leads Higher on Weather Uncertainty; Beans Waiting for New China Buying

Posted on Mon, 06/29/2020 - 14:39

Corn:  Corn futures opened under pressure overnight, but traders were unwilling to push prices much lower given heat and dryness in the forecast and major USDA reports on tap tomorrow, which helped the market to reverse higher and extend gains. Futures ended high-range with gains of 7 ½ to 9 ½ cents. Friday’s Commitment of traders Report showed funds extended their net short position in the corn market last week, giving the market some fuel for short-covering this week, with the weather being a possible spark. Rains are possible midway through this week for the Midwest, but after that, heat and dryness is expected over the next 10 days. Therefore, coverage and accumulation of this week’s rains will be key. The other main focus is USDA’s Acreage and Grain Stocks Reports that will be released at 11:00 a.m. CT tomorrow. Analysts have a tendency to underestimate USDA’s corn acreage projection and quarterly grain stocks are expected to remind of the plentiful supply situation.  

Soybeans:  November soybeans closed up 1/4 cent at $8.61 1/2 and near mid-range after hitting a three-week low early on. December soybean meal futures fell $2.00 at $288.60 and hit a contract low today. December bean oil rose 38 points to close at 28.46 cents after hitting a four-week low early on today. The soybean futures market today paused and saw some fund short covering ahead of Tuesday’s USDA acreage and grain stocks reports that are expected to show an uptick in U.S. soybean planted acreage from the March intentions report and the second biggest June 1 inventory behind last year’s record. These end-of-June reports have a history of producing surprises, both bullish and bearish. There was no daily USDA export sales announcement for U.S. soybeans today, following recent daily purchases from China. Weekly U.S. export inspections for soybeans were reported at 324,512 MT today versus 255,810 MT reported last week

Wheat:  December SRW wheat futures closed up 9 1/2 cents at $4.93 1/2 and December HRW futures ended the session up 8 1/4 cents at $4.49 1/4. Spring wheat futures narrowly mixed. Fund and other speculator short covering was featured today ahead of the USDA’s acreage and grain stocks reports on Tuesday morning, and following the winter wheat futures hitting contract lows last Friday. Wheat was also supported today by a smaller increase in Canadian planted acreage. Canadian farmers increased planted acreage to 25.0 million acres from 24.6 million last year but below the 25.2 million expected by analysts polled by Reuters, according to Stats Canada this morning. Russian wheat export prices fell last week as the harvesting of the new crop started. The market expects the new crop from the Black Sea to push wheat prices further down. Friday’s CFTC Commitments of Traders report showed larger-than-expected fund selling in wheat.  

Cotton:  Futures ended mixed on light volume. December cotton rose 13 points to close at 59.63 cents and near session highs. Futures fell in early trading on Monday as a spike in coronavirus cases in the United States stoked demand concerns for the natural fiber, ahead of the release of the USDA planted acreage data on Tuesday. Prices rebounded as U.S. equity markets and crude oil futures erased earlier losses and rallied.  Of course, despite the increasingly adverse conditions now occurring across Texas, the market remains concerned about demand. Traders are waiting for USDA's acreage report on Tuesday. A Reuters poll shows analysts estimate 13.153 million acres of U.S. 2020 cotton plantings. The USDA's weekly crop progress report is due later Monday afternoon.  

Hogs:  Hogs rose, erasing earlier declines. August hogs rose 32.5 cents to $48.45 and October rose 42.5 cents to $47.42. Cash hogs opened firm with moderate negotiated numbers.  Processors were a little more aggressive to start the day.  Supplies of market-ready hogs are more than ample, but a sluggish economic recovery could put some pressure on the demand. Barrows and gilts at the National Daily Direct were 41 cents higher at midday.  The CME Index rose 36 cents on Friday.  Pork values were higher at midday – up $3.58 at $69.53. Bellies were nearly $23 higher at midday.  Butts, ribs, and loins were all higher. Packer margins are estimated at $62.65 today, up from $60.30 a week ago, according to HedgersEdge.com.

Cattle: Live cattle futures finished 30 to 77 1/2 cents higher through the February contract. Feeder cattle posted gains of 20 to 90 cents through the January contract. Futures in both markets finished on or very near session highs. Cattle futures were choppy through midmorning before buyer interest started to pick up. June live cattle finished at $95.00 today, $1.21 below the average cash cattle price for last week. With tomorrow marking the final trade day for the contract, additional strength is possible, though the upside is limited. Deferred cattle futures are trading at premiums to the cash market, so the upside is likely limited until the cash market signals a low is in place.