After the Bell: Quiet Consolidation in Grains Ahead of Jan. 12 USDA Reports

Posted on Thu, 01/07/2021 - 15:03

Corn: Corn closed lower but in the upper third of today’s price range. March corn was down a penny to $4.94 and December was down 1/4 cent to $4.41. The corn market is consolidating a $1.70 rally off the Aug. 12 low. Futures were pressured by slightly wetter forecasts in South America. However, after the extremely dry start to the growing season, actual rainfall is critical. Rain events have not been well organized in the past. That means until rains verify, the market will swing with each new weather model run. Traders remain focused on USDA’s supply and demand updates next Tuesday. Most look for USDA to lower its estimates for U.S., Argentine and Brazilian corn production.  

Soybeans: March soybean futures closed down 6 1/4 cents at $13.55 1/4 today. March soybean meal ended the day down $6.10 at $432.20 and March bean oil lost 5 points at 43.79 cents. Beans, meal and bean oil futures saw some normal profit taking from the shorter-term traders today. Also, weather patterns in South American soybean regions are a bit less threatening. Rain is expected to impact many areas in Argentina over the next 10 days, with western and northern areas likely to be the wettest. Argentina’s potential for drier and warmer weather in the last 10 days of January are moderately high, which will stress those crop areas that receive the lightest rainfall next week. Brazil rainfall has been sporadic and light at times this week. Net drying has occurred in many areas, but good soil moisture is still supporting crop needs. A boost in precipitation will occur in Brazil grain, oilseed and cotton areas during the weekend and next week.   

Wheat: March soft red winter wheat futures closed the day down 5 1/4 cents at $6.42 1/4 today, while March hard red winter wheat futures fell 5 cents at $5.98 1/2.  Profit-taking pressure was seen today after the recent solid gains that saw SRW and HRW futures hit six-year highs this week. A rebound in the U.S. dollar index today also likely prompted some of the selling pressure in wheat futures.  The weekly USDA export sales report in the week ended Dec. 31 showed U.S. wheat sales fell 47% below the prior four-week average to 275,300 MT, with China buying 55,400 MT. Sales were at the low end expectations, which also added some selling pressure in futures. All the talk about U.S. wheat getting competitive on the world market has yet to result in actual improved business.  

Cotton: Cotton futures finished mixed today, with the March and July contracts 33 and 28 points lower, respectively, while the new-crop December contract ended 14 points higher. Old-crop cotton futures were unable to hold earlier gains as light profit-taking crept into the market late. Traders took some money out of the long side of the market as they start to prepare for next Tuesday’s USDA reports. More corrective trade is possible Friday, though seller interest should be limited by expectations USDA is going to cut its U.S. cotton crop and ending stocks figures from last month.  

Hogs: February hogs fell 65 cents to $69.125 and April rose 5 cents to $73.05. Prices end mixed with deferred futures leading higher, but February fell as the premium to the cash market limited buying interest. Midday pork cutout values rose $3.42 to $78.86 on strong morning sales after big movement the prior two sessions. Cash hogs were quoted sharply higher at midday with national average prices rising $3.57. The strength in the cash market may continue as stronger grocer demand will boost packer demand for slaughter numbers.  

Cattle: Live cattle futures saw two-sided action today, but the market ultimately settled high-range with a loss of 2 ½ cents for the front-month and gains of 22 ½ to 42 ½ cents for deferred months. Feeder cattle also settled high range and up 92 ½ cents to $1.35, with deferred months leading gains. Consolidative trade continued today after wide gyrations in both directions to start the week, with traders waiting for the cash market to provide additional direction. Trade has been slow to develop, with just some very light tests at steady prices of $110 in Iowa and $112 in Kansas. February live cattle are trading at nearly a $3.50 premium to last week’s average cash price, with packers enjoying wide profit-margins for this point in the season. HedgersEdge.com pegs margins near $117 a head, down nearly $66 from week-ago levels.