After the Bell: New Highs Soybeans, Meal and Corn on Weather, Demand Speculation

Posted on Tue, 12/22/2020 - 14:38

Corn: March corn gained 3 1/2 cents to close at $4.43 1/2, just below the new contract high at $4.44 1/4. Corn was up most of the day, supported up by strong export cash markets amid the continued port strike in Argentina and general weather uncertainty in South America. USDA did not announce any large daily corn sales this morning, but prices rallied to new highs. Corn is supported by China’s tightening feed grains situation supporting speculation that more sales are coming. Corn inspected for export fell to 762,900 MT last week, down from and below trade estimates calling for 750,000 to 1.1 MMT. However, China was the destination for about 272,000 MT last week.  Corn will need to see China buying to sustain the rally, especially if ethanol grind starts to falter.  

Soybeans: The soy complex came back to close near new contract highs scored earlier today. March beans rose 2 ½ cents to $12.50 and March meal was up $2.20 to $414.30. Soyoil oil closed mixed. Soybean futures traded both sides of unchanged, with pressure from wetter Argentina forecasts offset by speculation demand for U.S. products will increase with ongoing labor strikes disrupting Argentine exports. Export sales will be released Wednesday morning.  Wage talks between Argentine port workers and soymeal manufacturers were stalled on Tuesday, with a labor strike going into its 13th day. Rainfall in parts of Argentina and Brazil pressured U.S. soybeans futures, though persistent dryness remains a threat to crops amid strong global demand and tightening stocks.  

Wheat: March soft red winter wheat futures closed the day up 5 3/4 cents at $6.17 and March hard red winter wheat gained 4 3/4 cents at $5.79 1/4.  The wheat futures markets are being supported this week by the rallies in corn and soybean futures to fresh contract highs. The near-term technical postures for hard red and soft red winter wheat futures have also improved recently, inviting some chart-based buying interest. Gains in wheat futures today were tempered after Ukraine's government said it does not plan any change in its grain export rules, according to deputy economic minister Tartas Vysotskiy.  The U.S. Plains will be dry during the next week, but forecasters expect wetter conditions for week two. Two storms are tracking that could bring snow and rain to the dry areas of the central Plains.

Cotton: March cotton futures closed the day up 6 points at 74.82 cents and near mid-range. The cotton futures market saw the upside limited today on some more profit taking from the shorter-term traders, after prices last week hit two-year highs. Two key “outside markets” were in bearish daily postures for the cotton futures market Tuesday—a higher U.S. dollar index and lower crude oil prices. The global marketplace is still edgy following the weekend news of a newly discovered and more easily transmissible strain of Covid-19 in the United Kingdom. The World Health Organization tried to calm fears, saying the new strain was not out of control, contradicting Britain’s health minister. Still, this news is keeping cotton futures buyers on the sidelines so far this week.   

Hogs: Futures end mixed in quiet trading ahead of the USDA’s Hogs & Pigs Report tomorrow. February hogs were up 10 cents to $66.025 and April was up 2.5 cents to $70.025. Cash hogs were lower at midday with heavy supplies.  National daily direct price fell 57 cents. The CME Lean Hogs Index fell $1.17 to $62.55, a discount of about $3.50 to February futures and $7.50 to the April contract.  Pork cutout value was sharply lower at midday, falling $4.47 at $67.87.  Bellies, hams and picnics led declines sales were light to moderate.  Focus tomorrow will be on sales to China in the weekly USDA Export Sales Report after the unexpected jump in new business last week for both 2020 and 2021.   

Cattle: February live cattle futures closed the day down $1.20 at $113.45. January feeder cattle futures lost $0.725 today to close at $139.90. The cattle futures markets today saw some normal profit taking from recent gains that saw February live cattle hit a five-week high on Monday. Traders are a bit concerned about two weeks of lighter slaughter numbers building up market-ready supplies. However, beef demand remains solid. Several deferred live cattle futures contracts hit new contract highs Monday, suggesting an improving longer-term outlook. Live cattle futures traders are also a bit reluctant to buy rallies given the premium the futures market is trading to the cash market. USDA’s Cattle on Feed Report last Friday offered no surprises but did indicate cattle supplies will be peaking in the first quarter.