After the Bell: Choppy Week in Grains With Mixed Close as the Focus Turns to New Crop

Posted on Fri, 02/19/2021 - 14:25

Corn: New-crop futures are taking a leadership role. March corn was down 7 1/2 cents on Friday to $5.42 3/4, paring its weekly advance to 4 cents. December was up 3/4 cent to $4.60 but down from a new contract high at $4.66 1/2. December gained 11 1/4 cents this week. Corn pushed higher this morning after USDA’s preliminary projections for the 2021-22 season suggested there is little tolerance for production shortfalls this year. USDA forecast U.S. corn carryover will increase only slightly in 2021-22. USDA projected a record-large corn harvest of 15.150 billion bushels, up 7% from a year earlier, with an average yield of 179.5 bushels per acre, down 1.5 bu. from the trendline yield. Corn stocks remaining on Aug. 31, 2022 will rise just 50 million bu. to 1.552 billion from this season’s USDA estimate. Total U.S. corn use is forecast to rise 3% from a year ago on growth in domestic use and continued strength in exports, USDA said in a report released at an annual Outlook Forum.  

Soybeans: Old-crop soybean futures finished 2 1/4 to 5 3/4 cents higher, while new-crop November futures firmed 9 3/4 cents. For the week, March soybeans firmed 5 1/4 cents to $13.77 1/4 and November beans strengthened 23 1/4 cents to $11.96 1/4. Meal futures finished mixed today amid bull spread unwinding, while soyoil posted strong gains. USDA’s initial projections for the new-crop marketing year showed supplies are expected to remain tight, despite a sharp increase in acres. Since the tight old-crop supply situation is already known and largely factored into prices, more bull spread unwinding could be seen as traders look to narrow old-crop/new-crop spreads. The other focus will be South American weather. Forecasts call for northern Brazil to remain wet, which will keep soybean harvest slow, while southern Brazil and most of Argentina are expected to be dry.  

Wheat: Wheat futures briefly ventured into positive territory early this morning, but the push to new highs for the week (and month for winter wheat) triggered profit-taking. Winter wheat futures settled low range, with SRW down 5 to 11 3/4 cents and HRW posted losses of 3 to 5 cents. Spring wheat posted more of a midrange finish, with futures down 1 ¼ to 3 cents. March SRW wheat futures settled 14 cents higher for the week, despite today’s losses.  USDA’s initial projections for the 2021-22 marketing year shifted more focus to the coming growing season and the battle for acres. The department called for a modest boost in total wheat plantings compared with 2020’s historically low figure, with spring wheat expected to give up acres to crops like corn and soybeans. To prevent even greater acreage loss, spring wheat prices likely need to rise.   

Cotton: March cotton futures closed the day up 22 points at 88.95 cents and for the week rose 168 points. December futures gained 42 points at 85.50 cents and on the week rose 161 points. Futures prices hit a new contract high today and scored a 2.5-year high.  Another very good week for the cotton market bulls, with strong price uptrends remaining in place on the near-term and longer-term charts. USDA’s Ag Outlook conference today forecast U.S. cotton planted acreage at 12.0 million, with harvested acres at 10.0 million and a national average yield of 840 lbs. per acre. That would produce a crop of 17.50 million bales. Total use is forecast at 18.0 million bales. Carryover: 3.8 million bales. USDA forecast the average cash price at 75 cents a pound.  

Hogs: April hogs fell 42.5 cents on Friday to close at $84.50, extending the weekly decline to 70 cents. June hogs fell 37.5 cents to $92.325, paring its weekly gain to 42.5 cents. Futures ended mixed this week amid the weather disruptions. Slaughter this week is estimated at 2.438 million head, down 173,000 head from a year earlier. Look for stronger cash bids next week as plant operations rebound but it may take several weeks to clear the backlog. The pork cutout has rallied almost non-stop from the start of the year, gaining more than $20 over the last 8 weeks. The rally in February has been unprecedented, and so far it is the strongest cutout rally in at least the last two decades.  The outlook into late spring will be highly dependent on export demand.  

Cattle: April live cattle futures closed the day up $0.75 at $123.675 and for the week lost $1.50. March feeder cattle futures rose $0.925 at $139.125 and on the week fell $1.725. Cattle futures late this week were in a consolidation pattern after pushing to new highs in several contracts on Tuesday. However, solid price uptrends are in place on the daily charts for live cattle futures, suggesting sideways to higher price action next week. More normal temperatures in cattle country next week should allow a return to normal transportation and processing activities, following the frigid weather conditions seen the past week or longer. Friday’s noon beef report showed Choice grade cutout up 36 cents and Select down 2 cents, on light movement of 61 loads amid restrict slaughter supplies. This week’s kill was estimated down 74,000 head from a year ago.