After the Bell: Wheat Gains on Weather Concerns; Corn, Soy Close Lower

Posted on Thu, 02/18/2021 - 14:47

Corn: March corn futures closed down 2 3/4 cents at $5.50 1/4 and May futures lost 1 3/4 cents at $5.49. The corn market is pausing late this week, but futures have made a good recovery from the February lows. USDA’s Chief Economist Seth Meyer this morning during the online Outlook Forum said the agency is projecting U.S corn plantings will rise to 92.0 million acres from 90.8 million last year. That was below the average trade estimate of 92.9 million and helped to provide light support. USDA sees an average U.S. farm corn price at $4.20 in 2021-22. USDA will release a full set of corn balance sheet specifics on Friday morning. Concern about drier weather in Argentina and a mixed outlook across Brazil for planting an already delayed safrinha corn crop is also providing underlying support to corn futures. An increase in rain will be needed in early March to prevent serious crop stress from expanding in Argentina.   

Soybeans: March beans fell 8 3/4 cents to $13.75 and November futures were down 2 3/4 cents to $11.86 3/4.  March soymeal futures fell $5.80 to $425.90 and March soyoil rose 14 points to 46.91 cents. Soybean futures retreated on worries the USDA updated 2021-22 balance sheets on Friday morning may not be as tight as many have been talking about. This morning, USDA’s chief economist said the agency is forecasting soybean plantings will rise to 90.0 million acres, up from 83.1 million in 2020 and generally in line with the 89.8 million acres expected by traders polled by Bloomberg. Reuters had an average trade guess of 89.4 million acres. Export sales will be released Friday with traders looking for old-crop sales of 300,000 MT to 900,000 MT, compared with 804,722 MT a week earlier. New-crop sales are seen at 50,000 MT to 300,000 MT, compared with 178,500 MT reported a week ago.  

Wheat: March SRW wheat was up 18 1/2 cents to $6.62 1/2, and March HRW futures rose 12 1/4 cents to $6.36 3/4. March spring wheat gained 8 3/4 cents to $6.31 3/4. The volatile wheat trade continues. Up sharply Tuesday, steep declines yesterday and then strong gains today. The markets initially rejected the rally to start the week on U.S. winterkill concerns but gave most of it back yesterday. Today, the market signaled that the potential losses may have been as severe as first thought after the weekend’s arctic blast. The market also found light support from USDA forecasting U.S. wheat acres at 45 million, slightly below the 45.5 million traders had expected. That may signal USDA will likely project a smaller carryover when it releases its full balance sheet on Friday.  It also means spring wheat plantings may continue lower if prices fail to keep up with stronger profits offered from corn, beans and other oilseeds both in the U.S. and Canada.  

Cotton: Bulls maintain their grip on the cotton market, with futures registering yet another round of contract highs today before settling midrange and up 33 to 37 points through the July contract, with deferred months choppy to lower. The National Weather Service’s 30- and 90-day outlooks signal warm, dry conditions are likely ahead for much of the Plains and South. The forecast does not bode well for easing drought entrenched across the much of the region, particularly in the top-producing state of Texas. USDA at its Ag Outlook Forum today projected cotton plantings at 12.0 million acres for 2021-22, a slight retreat from 2020 and just a bit higher than the 11.77 million-acre planted acreage projection analysts surveyed by Bloomberg expected. In prepared remarks, USDA Chief Economist Seth Meyer said, “With a considerable reduction in carryin stocks, and steady exports, ending stocks are expected to again decline in 2021-22 despite growth in the crop.”  

Hogs: April lean hog futures rose $0.025 today to close at $84.925. The lean hog futures market is pausing and seeing mild profit taking this week after hitting contract highs last Friday. Cold weather has limited animal weight gains and processing recently. Average hog weights in the Iowa/southern Minnesota market fell another 1.1 lbs. to 287.2 lbs. during the week ending Feb. 13, which is 1.9 lbs. above year-ago levels. Look for weights to continue to retreat just as numbers begin to taper. The pork cutout rose by $2.71 to $90.50 at noon today, with movement of 173.62 loads. The gains in cutout were led by bellies. Stronger Chinese hog futures were seen today after a week-long holiday, suggests the industry is worried about a new variant of African swine fever hurting China’s herd-rebuilding plans.  

Cattle: February live cattle futures dropped 17 1/2 cents, while the April through October crops fell 77 1/2 cents to $1.225. Feeder cattle finished mixed with prices ranging from 62 1/2 cents lower to a nickel higher through the November contract. Pressure on February live cattle futures was limited today, despite the contract’s $1-plus premium to last week’s cash trade. Given uncertainties with this week’s cash trade due to the harsh arctic blast, traders are playing it relatively close to the vest. While there’s hope cash prices will strengthen as market-ready supplies decline in the months ahead, this week’s winter storm disruptions throw some near-term uncertainty into the mix, giving traders a reason to take profits out of the long side of the market ahead of the monthly USDA Cattle on Feed Report Friday.