After the Bell: Soybean, Corn Rise on Demand, South American Weather Threats

Posted on Tue, 11/17/2020 - 14:44

Corn: December corn futures closed up 4 cents at $4.20 1/4 today. March corn gained 2 1/2 cents to close at $4.26 3/4. Bull spreads were working in the corn futures market today. Strength in soybean futures to new contract highs again today is also helping to pull corn futures higher. Before the reopening, USDA announced private exporters sold 195,000 MT of corn to Mexico for delivery this season. The sales provided support, but traders are still watching for any confirmation of Monday’s rumored Chinese shopping. Nearly 815,000 MT of U.S. corn was also inspected for export last week, including almost 280,000 MT for China, USDA reported yesterday. Weather leans just a bit negative for the corn market as parts of Brazil and Argentina corn regions could receive beneficial rains over the next two weeks.

Soybeans: Soybean futures climbed to new contract highs today before settling midrange and up 10 ¾ to 16 ¼ cents, with nearby contracts leading gains. Soymeal also enjoyed an impressive rally today before settling midrange and up $3.80 to $6.50. A tight stocks-to-use ratio has helped fuel the rally in soybean prices, with the front month climbing to its highest level in more than four years today. The National Oilseed Processors Association showed its members crushed the most soybeans on record for any month in October and this week’s export inspections update shows the U.S. is indeed aggressively shipping booked soybeans. The situation heightens attention on the South American growing season, where dryness remains a concern.   

Wheat: December SRW wheat fell 3 3/4 cents to $5.94 ¼. December HRW fell 5 1/2 cents to $5.52 ½. Spring wheat was down 4 to 6 cents. The wheat market lacks much bullish news, but stronger corn prices provided limited support.  World wheat buying has improved recently but the U.S. continues to get only a small portion of the new business. Wheat continues to be a short leg against long corn and soybean positions amid sluggish demand for U.S. supplies. Seasonal trends point lower into early January when USDA releases its first estimate of winter wheat planted area.   The U.S. Plains may get another shot at rain this weekend  

Cotton: The 2020-crop cotton contracts finished in the lower half of today’s trading range with losses of 25 to 46 points. December 2021 futures closed 14 points lower. Cotton futures were pressured by an increasing number of Covid-19 cases and restrictions in the U.S. and Europe. Traders are concerned another wave of shelter-in-place restrictions this winter would slow demand for textiles. There is also concern crude oil prices will weaken, making synthetic fiber production cheaper and also threaten cotton demand. But the lack of heavy selling pressure on cotton futures signals these are still background concerns, likely to cause more day-to-day price movements than sustained trending moves for now.  

Hogs: December lean hog futures rose $0.375 and closed at $65.525 and February futures gained $1.85 to close at $65.625. Short covering was featured today in February hogs after prices hit a nine-week low Monday. Cash hog prices were mixed today. The CME cash hog index fell 76 cents on Monday to $70.08 but remains at a large premium to December futures. Packer profit margins have slipped nearly $8 over the past week, but at $28.75 a head, there is still plenty of incentive for packers to keep lines full. That is an easy task with market-ready supplies rising.  Tyson Foods says China is likely to remain a top buyer of U.S. pork exports.  

Cattle: Futures rebounded at midmorning on news of a surge in beef demand. December cattle rose 90 cents to close at $111.35 and February gained $1.55 to $113.575.  January feeders gained $1.70 to $139.725. It been a slow start to cash cattle trade this week, but traders are looking for better packer bids. USDA reported Choice beef cutouts jumped $6.33 at $233.28, the highest since the second quarter and above the August peak. This surge will further expand packer margins. The next target for Choice cutouts is up near $240. Today’s rally in beef prices seems to indicate that grocers are ramping up purchases as consumers may begin increasing supplies.