After the Bell: Corn, Soybeans Close Slightly Higher on Warmer, Drier Forecasts

Posted on 07/08/2019 2:34 PM

CornCorn futures finished 3/4 cent to 1 1/2 cents higher in the September through May 2020 contracts. That was near mid-range on the day.  Corn futures gapped higher overnight, but filled the gap during daytime trade as buyer interest waned. In the end, today’s price action was largely undecided. And it’s very possible that will remain the case over the next two days, as traders prepare for USDA’s July crop reports on Thursday morning and try to figure out if weather forecasts are price-negative or price-supportive. The average pre-report trade estimates for Thursday’s reports from a Reuters poll expects old- and new-crop corn ending stocks to increase slightly from last month, and for crop size to be slightly smaller. In reality, ending stocks are likely to rise more than anticipated, while the crop size will increase as the World Board factors in NASS’s June harvested acreage estimate that was 1.2 million acres higher than what it used in its June projection. Therefore, Thursday’s reports may spark a negative price reaction even if the data isn’t bearish.

Soybeans: Futures ended slightly higher and near midrange. August soybean futures rose 3 cents to $8.79, with November gaining 3 ¼ cents to $8.97 ¾. Meal was steady to down 30 cents today and soybean oil futures were up 39 to 48 points. Soybeans ended higher but down from overnight highs on forecasts for warmer, drier weather the next two weeks. But a tropical storm in the Gulf of Mexico could bring some rain to the central Midwest next week. Traders were positioning for the weekly Crop Progress Report and the CFTC trader position data this afternoon. USDA said 54% of the crop rated “good” to “excellent” condition last week and traders look for last week’s warmer weather to give the crop a 1-point boost in tonight’s update. Most state reporters will likely underscore need for extended growing season and absence of extended hot, dry weather to reach optimal yields.  Overall, crops are 2 to 4 weeks behind normal development with conditions far below average but improving.  An average yield is still possible, but not likely given all the challenges absorbed and ahead. The soybean market needs more confirmation of adverse weather to trigger an upside chart breakout.On Thursday, USDA will likely cut the size of this year’s crop to 3.833 billion bushels, down from 4.150 billion bu. estimated in June because of the smaller acreage estimate released on June 28. USDA’s chief economist says the July 11 crop report “will reflect weekly crop progress data and be more refined than prior reports.  New-crop ending stocks may fall to 812 million bu., according to a Reuters poll of analysts, down from 1.045 billion estimated on June 12.

Wheat: Winter wheat futures prices closed down mostly 2 to 4 1/2 cents and nearer their session lows. Spring wheat futures also finished low range, with losses of ¾ to 2 cents. Weather in U.S. wheat country has turned more favorable for growing/harvesting. The Weekly Crop Progress Report this afternoon is expected to show the U.S. HRW crop near half complete. The weather is looking cooler and wetter across parts of eastern Europe and the Black Sea regions the next two weeks, aiding spring crops there. However, dryness is a mounting concern in several major wheat- producing areas around the world, including areas of Australia, Canada, Ukraine, Kazakhstan, Russia, and some regions of Europe, including top-producing France and Germany. Wheat traders are looking for USDA to slightly raise its total U.S. wheat production forecast in Thursday’s supply and demand report 5 million bu. from last month to 1.908 billion bushels. Both old-crop and new-crop ending stocks are expected to be revised slightly lower in the July 11 update. USDA may revise down its global ending stocks estimates slightly, but it will still show world inventories growing from the 2018-19 season. Those burdensome supplies continue to be an anchor on U.S. exports and prices.

Cotton:  Futures closed lower and near session lows. December futures were down 118 points at 65.64 cents. Cotton prices drifted lower on fresh technical selling after failing to hold above the 40-day moving average last week and falling back below it today. Traders are looking for USDA to report a small uptick in cotton conditions in the weekly Crop Progress Report this afternoon.  About 52% of the crop was rated in “good” to “excellent” condition on June 30, up 2 percentage points from a week earlier and well above the 43% ranking a year earlier. Traders are also worried about demand amid signs the global economy is slowing from the impact of the U.S./China trade war.  China continues to demand that the U.S. remove all US tariffs on its exports as a condition for reaching a trade deal ahead of talks this week.  

Hogs: August lean hog futures dropped 97 1/2 cents today, while the October contract lost $2.075 and hit a 4.5-month low. Both contracts finished nearer their session lows. The hog futures market continues to be pressured by big supplies of hogs coming to market. Today’s slaughter came in at 479,000 head, which underscores the very hefty supply situation that is keeping futures prices trending down, at present. Average hog weights in the key Iowa/southern Minnesota market dropped 1.4 lbs. during the week ending June 29. However, weights were still up a dramatic 4.7 lbs. from year-ago levels. This further highlights the abundant pork supplies. The national average cash hog bid fell $1.32 on Friday. The pork cutout value dropped 78 cents at midday today, on light movement of 114.66 loads. Losses were led by picnics, loins and ribs.

Cattle: Cattle futures saw a split day of trade and futures settled 45 to 85 cents lower through the December contract and 5 to 22 ½ cents higher in deferred months. Feeder cattle futures settled narrowly mixed. The average cash steer price edged $1.11 higher last week to $111.24, which was an encouraging shift from steadily lower prices the past several weeks. The slight upturn in the cash market makes traders optimistic futures have also put in a low. Their confidence that is indeed the case would likely rise further if the boxed beef market perked up. Softer prices Friday followed by mixed values and a light load count this morning certainly is not conducive for higher cash or futures prices going forward.  Beef tends to be seasonally weak into early August. But marketings are thought to be quite current. An update from an Oklahoma City feeder cattle auction noted light sales at $2 to $6 higher prices today. Thin cattle at the sale were indicative both of the shift to more summer-like weather and current marketings.  

 

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