After the Bell: Choppy Trade, Firmer Grain, Soybean Closes Before USDA Reports

Posted on 06/10/2019 2:34 PM

Corn:  Corn futures prices closed up 1/4 to 1 1/4 cents today. Prices closed near their daily highs. Traders were anxiously awaiting this afternoon’s weekly crop progress reports and then Tuesday morning’s monthly USDA supply and demand report. Good planting progress occurred during the weekend as much of the Midwest was dry Friday and Saturday with many areas dry through Sunday as well. Traders were looking for corn planting to be at least 80% completed, with some looking for something as high as 87% done. We are looking for 85% planting progress. The more important number will be the first crop rating of the season and it may be low, with 55% to 58% rated in “good” and “excellent” condition compared with to 73% on average the past five years. Tuesday's USDA report finds the trade thinking monthly U.S. and world supply and demand forecasts will come up well short of most trade estimates on U.S. planted acres and yield reductions but could trim U.S. corn export projections based on the current slow pace and rising global competition.  U.S. corn inspected for exports rose to 850,647 metric tons (MT) in the week ended June 6, up from 744,840 MT a week earlier but still below the 1.41 MMT a year ago. That was at the top end of trade estimates.  

Soybeans: Soybean futures traded in a wide range today, gapping lower on the open and pressing lower before uncovering bargain buying that eventually closed that gap. Futures settled in the upper half of their daily trading range with gains of 2 ¼ to 4 cents. Soybean futures initially faced some followthrough selling after a disappointing close Friday and a weekend of warmer temperatures and drier weather helped to advance fieldwork. Traders surveyed by Reuters expect USDA to report that 56% of the crop had been planted as of Sunday, which would still be quite slow. The forecast is not encouraging for crop development or additional progress, as more rain is likely over the next week to 10 days and temperatures are expected to be on the cool side. Growing degree days could become an increasing concern in the weeks ahead. For now, the market’s upside remains capped by a lack of progress on the U.S./China trade front.   forward-priced via hedge-to-arrive contracts for harvest delivery on expected 2019-crop production.

Wheat:  Winter wheat futures were up 2 to 4 cents  and spring wheat was mixed  with all three markets closing near daily highs. Unfavorably wet weather is expected in the last half June across much of the Central Plains and Midwest, increasing concerns about yields and quality. Wheat inspected for export was about as expected at 464,779 MT the week ending June 6, down from 592,964 MT a week ago, but up from 419,589 MT a year ago. Western Saskatchewan to Alberta got only minimal relief from drying soils. More rain is needed. Dryness continues to dominate most wheat areas of Australia, worsening already poor soil moisture and increasing yield risks.  EU wheat futures settled €1.00-2.00/MT lower at new three-week lows, and despite a weaker euro against the dollar at midday. Saudi Arabia reportedly is testing Russian wheat quality for possible increased shipments, potentially cutting into U.S. demand. The Western/Central European weather pattern also remains broadly favorable to wheat and early corn development.  The world markets don’t seem concerned about soil moisture drying in June across eastern Ukraine and southern Russia.

Cotton:  Futures ended slightly higher and in the upper halves of the daily ranges. July rose 40 points to close at 65.99 cents and December gained 6 to 65.57 cents. The market was supported by hopes for improved demand from Mexico after President Trump on Friday suspended new tariffs indefinitely. Prices fell to levels that triggered improved overseas buying last month and some of today’s rally was tied to talk of fresh inquiries and maybe some new sales. Sales and shipments both need to pick up, but the market remains concerned about the large unshipped sales to China, Turkey and India. Tuesday’s USDA supply and demand report is expected to show 2019-20 U.S. ending stocks will rise near 6.7 million bales from 6.4 million forecast in May. World inventories may rise to 76.05 million bales from 75.7 million estimated last month.  

Hogs:  Hogs rebounded sharply Monday, with August futures up $2.25 at $84.85 and December rising $2.725 to close at $79.375. U.S. President Donald Trump said on Friday that he has indefinitely suspended the threat of tariffs against Mexico after reaching "a signed agreement" on immigration. Prices plunged on Friday before the announcement and gained back most of those losses. Midday pork cutout values rose $1.49 on strength in picnics, bellies and hams. However, sales were light and need to pick up with slaughter levels running at records.  Hog weight data shows rising tonnage amid expanding slaughter. Last week’s kill rose to 2.366 million head, up 162,000 head from a year ago. Today’s slaughter was up 33,000 head from a year ago. Packers are making an estimated $6.65 a head, up from $3.25 a week ago, according to HedgersEdge.com.

Cattle:  Live cattle futures closed up $2.85 in the August contract, with October futures up $2.25. August feeder cattle futures closed up $2.15. Heavy short covering and perceived bargain hunting were featured in the cattle futures markets today after the U.S. and Mexico reached a deal late Friday to avoid the U.S. slapping trade tariffs on its southern neighbor. Follow-through buying will be key for the cattle futures, and may be tough to sustain amid recent lower cash cattle and wholesale beef prices. Boxed beef cutout values were mixed today, with Choice down 70 cents and Select up $1.55. There were only light sales at midday. Friday’s CFTC report showed funds cut net-long positions 17,673 futures and options but remain net long 47,842 contracts as of June 4. Commercials cut net short positions 15,768 contracts.

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