After the Bell: Corn, Beans Extend Declines on Beneficial Weather; Wheat Rebounds

Posted on Wed, 07/29/2020 - 13:28

Corn: Corn futures finished near session lows with losses of 2 1/4 to 4 1/2 cents through the July 2021 contract. Futures faced followthrough selling pressure today as the market continues to reel from Monday’s stronger-than-expected weekly crop condition ratings. With weather expected to be generally non-threatening for the bulk of the Corn Belt into early August, there isn’t much buyer interest to offset the selling. Funds were net short 155,676 contracts of corn futures as of July 21. Money managers have added to their short stance since that time. While that’s a large net-short position, it’s less than half of the record fund short, so speculators could pile a lot more money into the short side of the market if weather remains generally non-threatening. Seasonal price tendencies strongly favor bears.   

Soybeans: November soybeans closed down 2 1/4 cents at $8.85 1/4 today. December soybean meal closed down $1.70 at $295.80 and December bean oil gained 14 points at 30.06 cents. Soybean bulls have faded as USDA did not announce any new large sales in its daily reporting service Wednesday morning. Price action in soybeans will depend on the pace of Chinese new purchases and old-crop shipments heading into harvest. U.S. soybean crop conditions also improved three points in the week ended July 27 to 72% G/E, with strong gains reported in Nebraska, Illinois, Kansas and the eastern Corn Belt. Crop areas north of Interstate-80 will see limited rainfall through Aug. 8, while abundant rains of 1-3 inches will fall across all other crop areas over that period.

Wheat: December SRW wheat futures closed up 8 1/4 cents at $5.38 1/2 today and December HRW wheat futures rose 8 1/2 cents at $4.56. The wheat markets are seeing support this week on increased sales to Egypt at higher prices. Tuesday’s Egyptian purchase of 470,000 MT of Russian and Ukrainian wheat was the largest purchase since October 2018. Purchases are now running 32% ahead of last season’s pace, reflecting the increasing demand for wheat from the world’s largest importer despite rising prices. Focus is also on world wheat supplies. SovEcon said on Wednesday it reduced its forecast for Russia's 2020 wheat crop to 79.3 MMT, down from 79.7 MMT on declining conditions for spring wheat. The weekly USDA export sales report out Thursday morning is expected to show U.S. wheat sales of 250,00 to 650,000 MT in the 2020-21 marketing year.

Cotton: December rose 50 points to 61.61 cents and finished in the upper half of the daily range. Futures continued to claw back more of the steep decline from July 24 today amid worries about the Texas crop outlook after recent heavy storms in the southern part of the state and dry conditions across the western growing region. Trading was tentative ahead of tomorrow’s weekly export sales update. Friday is the last day of the marketing year and last week’s USDA sales report showed more than 3.5 million bales of undelivered sales, including 1.35 million sold to China. Undelivered bales, or a measurable portion, will need to be rolled into the 2020-21 season, or cancelled.  

Hogs: October futures fell 90 cents to $49.825 and December was down 77.5 cents to $51.025. Cash hogs opened lower with moderate negotiated numbers. The national average hog price fell $1.28. Packers are starting to dig into the backlog of hogs in the supply chain, but it’s going to take several months to get caught up. Hog weights this week dropped another 1.2 lbs. to 281.1 pounds. However, that’s still 3.9 pounds above year-ago levels.  Slaughter the first three days of this week is 1.407 million head, down 8,000 head from last week and 17,000 head larger than a year ago. Pork values were firm at midday, rising 79 cents to $70.20.  Bellies and picnics were higher.  Hams and loins were firm. Butts were slightly weaker. Sales were light to moderate after improving slightly on Tuesday.  

Cattle: Cattle futures enjoyed followthrough buying at midweek after yesterday’s rebound. This is an encouraging signal the market could be gearing up for additional price gains. Live cattle settled high-range and up 55 cents to $1.075. Feeder cattle settled 75 cents to $1.475 higher through the March contract. Cattle traded at prices ranging from roughly $97.00 to $97.50 at today’s online Fed Cattle Exchange auction, which was right in line with last week’s national average cash price. Trade has yet to get underway in earnest, but on Tuesday there was a light test at $95 in Texas and $96 in Kansas, steady with the week prior. And there have been some unconfirmed reports of $97 trade in these areas today. Given continued backlogs of market-ready cattle, the product market likely needs to move higher for cash and futures prices to rally.