After the Bell: Corn Leads Grain Market Rallies on Crop Uncertainty, Chart Buying

Posted on 07/03/2019 1:55 PM

Corn:  Prices ended higher and near session highs heading into the July 4th holiday. July corn rose 19 1/2 cents to $4.33 and December futures rose 15 ¼ cents to $4.41 ¼. Fundamental support came from Monday’s steady crop condition ratings, whereas traders anticipated a slight improvement. But given the delayed maturity of this year’s crop and extreme uncertainty with planted acreage and yield potential, crop condition ratings will continue to provide price direction. Traders will come back from the holiday on Friday with USDA’s weekly export sales report for early guidance. Sales of old-crop corn in the week ended June 27 are expected at 100,000 to 400,000 metric tons (MT), compared with 294,912 MT a week earlier. New-crop sales expected in a range of 100,000-300,000 MT, up from 110,112 MT a week before.  On July 11, USDA releases its monthly World Agricultural Supply and Demand Report and it will incorporate the new acreage estimate from June 28 into its new-crop corn balance sheet. Assuming there’s no change to yield, that would add about 200 million bu. of supplies to the new-crop balance sheet and push ending stocks up over 1.8 billion bushels.

Soybeans: Nearby soybean futures closed up around 9 cents and near their daily highs today. September soybean meal closed up $2.50 and September bean oil was up 28 points. The soybean market saw buying interest resurface today on reports China will engage in some goodwill buying of U.S. soybeans, corn and pork as trade talks between Beijing and Washington resume, according to unnamed sources cited by Bloomberg. But traders will remain skeptical of the report until actual purchases are realized. Look for some follow-through buying interest in soybeans on Friday. Historically, the first trading day after the U.S. Independence Day holiday can be very important for grain price action for the following several weeks. Most look for this week’s warmer and mostly drier weather to give the soybean crop boost in next Monday’s crop progress ratings report.Traders will get the weekly USDA export sales report on Friday morning due to the U.S. Independence Day holiday on Thursday. Specifically, traders will look any new cotton business from China after that nation last weekend pledged to buy more U.S. ag products. It's expected that U.S. soybean sales will total 400,000 to 800,000 MT in the 2018-19 marketing year, and 200,000 to 400,000 MT in the 2019-20 marketing year.

Wheat:  Wheat prices followed corn higher, with September SRW futures up 10 ¾ cents to $5.14 and September HRW futures rising 11 ¼ to $4.43 ¾. September spring wheat rose 3 ¾ to $5.40. Harvest results will dominate trading until USDA releases is next crop production report on July 11. Winter wheat yields and protein levels have been coming in slightly better than expected, but the range is wide, and it may take more results to get a better handle of the crop size. The USDA weekly export sales report on July 5 will be the first order of business when traders return from the one-day holiday recession on Friday. Traders are looking for sales to slow to 250,000 to 550,000 metric tons (MT)in the week ended June 27, down from 611,997 MT reported a week earlier.  

Cotton: December cotton futures closed down 23 points today and finished near the session low. For the past six weeks prices have been chopping in a sideways pattern at lower levels on the daily bar chart. Traders will get the weekly USDA export sales report on Friday morning due to the U.S. Independence Day holiday on Thursday. Specifically, traders will look any new cotton business from China after that nation last weekend pledged to buy more U.S. ag products. The U.S. and China trade truce may boost U.S. cotton exports that have slowed. However, improving U.S. crop conditions may cap rally attempts. Traders are starting to watch developing dryness in India and China. India and Vietnam have large supplies of U.S. purchases unshipped with the marketing year coming to an end on July 31.

Hogs:  Futures ended mixed to mostly lower on Wednesday. August hogs fell 60 cents to $78.375 and December fell 75 cents to $72.65. Friday morning the focus will be on the weekly USDA export sales report. Last week’s report showed sales rose to a three-week high while shipments were highest since early April. Another strong week will put a floor under the market after today’s weak technical close.  Wholesale pork prices fell again at midday on Wednesday on moderately active sales. Slaughter the first three days of this week is 15,000 head above a week ago, maintaining a burdensome supply outlook.  China will engage in some goodwill buying of U.S. soybeans, corn and pork as trade talks between Beijing and Washington resume, according to unnamed sources cited by Bloomberg.  

Cattle: August live cattle futures closed up $1.70 at $105.80 and closed at the highest closing level in three weeks. August feeder cattle futures were down $1.40 on the day and were pressured in part by a solid rally in the corn market. Look for some follow-through buying strength in fat cattle futures on Friday to end the week, after today’s good gains. The discount futures are trading to current cash bids should add some support to the futures market. There was a very light cash market test Tuesday in Texas at $108. However, both Choice and Select boxed beef values declined Wednesday after two days of gains. The wide spread between choice and Select boxed beef values points to current marketings, and packers are enjoying wide profit margins. This could work to feedlots’ advantage next week. But after many weeks of softer prices, traders will likely keep futures in line with to under the cash market until higher trade develops.

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