After the Bell: Soybeans Shoot to New Contract Highs

Posted on Wed, 09/16/2020 - 14:48

Corn: Corn futures strengthened through the day, ending near session highs with gains of 5-plus cents though the May contract. Corn was pulled higher by strong gains in the soybean market today, along with expectations China will continue its recent aggressive buying of U.S. corn for 2020-21 delivery. There were no new fresh daily corn sales today, but traders expect tomorrow’s weekly export sales to again be strong, with the upper end of the trade estimate range at 1.9 MMT. The only daily sales announced during the week ended Sept. 10 were 101,600 MT to unknown destination, so the market is counting on a rush of purchases under the 100,000 MT daily threshold. Export business to China will be just as important as the total volume to all countries.

Soybeans: Soybean futures opened under pressure, but rallied through the day trading session, resulting in a technically encouraging bullish reversal, with November futures hitting a new contract high of $10.13 ¾. Futures settled high-range and up 15 ½ to 19 ¾ cents through the July contract. Soy products also took part in the rally, with soymeal closing $3.00 to $6.50 higher and soyoil posting gains of 51 to 86 points. Strong Chinese buying of U.S. soybeans paired with late-season crop concerns in the U.S. have fueled a strong rally in the soybean market. And today’s move to new highs for the week triggered additional technical-based buying. Drought during the key month of August for much of the Midwest has production estimates sliding, and rains likely did little more than stabilize conditions last week.

Wheat: December SRW wheat futures prices closed up 3 3/4 cents at $5.42, nearer the session high after hitting a three-week low early on today. December HRW wheat futures gained 7 cents to close at $4.75 and also near the session high. December HRS wheat finished 7 1/4 cents higher at $5.31 1/2. The wheat market saw spillover buying interest today from rallying corn and soybean futures. Support also came in part from reports APK Inform said weather conditions for sowing of winter grain are the worst in the past decade due to severe drought across most of Ukraine. Just light rain is in the forecast.

Cotton: December cotton futures closed down 7 points at 66.37 cents today and near mid-range. The market took a normal pause today after hitting a 6.5-month high on Tuesday. Price action was light and two-sided. Selling interest was limited today as Hurricane Sally pounding the Gulf Coast, with traders watching the path closely for potential damage to the cotton crop in the region. However, unless the storm ends up being worse than expected or moves into the cotton-heavy production areas, additional price support from this storm is likely to be limited.

Hogs: Lean hog futures faced pressure for much of the day, with futures closing Friday’s chart gap to the upside and likely to close Thursday’s gap as well. The market settled 12 ½ cents to $1.075 lower, with the December contract leading losses. It appears the lean hog market rally is running out of steam. The market had shot higher on news Germany has African swine fever, leading to bans by some major meat importers, including China. But the upside move was likely overdone and some are now saying Denmark will likely fill much of the void left by Germany. Nevertheless, the market will keep an eye on weekly export sales and shipments tallies, especially as they pertain to China.

Cattle: October live cattle futures ended 37 1/2 cents lower at $106.725. The December through June contracts firmed 15 to 37 1/2 cents. Feeder cattle dropped 27 1/2 cents to $1.275 today, with fall contracts leading losses. October live cattle futures traded lower today, despite higher prices in the cash cattle market. The contract’s premium to this week’s initial cash cattle trade limited buyer interest in the lead contract. Cash sources reported cash trade in the $102 to $103 range in the Southern Plains this morning, with prices moving upwards of $104 by early afternoon. Those prices are up $1 to $3 from last week’s average. The cash strength wasn’t a surprise given much smaller showlists and packer margins, which are deep in the black.