After the Bell | August 3, 2021

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Corn: Futures closed in the lower portion of today’s range with losses of 6 to 8 cents but about a nickel off session lows. The December contract fell 7 1/2 cents to $5.51 3/4 a bushel. Corn was pressured by strong spillover from the soy complex, which overshadowed the drop in USDA’s crop condition ratings yesterday afternoon. Forecast models signaling improved rain chances for most of the Corn Belt aside from parched northwestern areas of the region also provided pressure. Funds were sellers on the day in the corn market, though they weren’t as active as they were in the soybean market. As of July 27, managed money accounts were net long 225,949 corn futures contracts, which is off the mid-July low of 204,888 contracts.

Soybeans: Soybean futures fell more than 2%, with the November contract down 33 3/4 cents to $13.19 3/4, near a four-week low. Soymeal futures fell $8.00 to $9.40 in August through December contracts, while soyoil futures dropped 79 to 135 points. Soybeans tumbled on an unexpected increase in USDA’s weekly crop condition ratings and on a wetter outlook for parts of the Midwest. USDA yesterday reported 60% of the U.S. soybean crop was in “good” or “excellent” condition at the start of this week, up from 58% a week ago and stronger than analyst expectations for 57%. When USDA's weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the soybean crop rose 1.7 points to 352.9 points, 7.8 points below the five-year average.

Wheat: December SRW wheat slid 4 1/2 cents to $7.34 3/4 a bushel, but December HRW rallied 4 cents to $7.18 3/4. December spring wheat declined 4 1/4 cents to $9.07. With the winter wheat harvest essentially over, the downward pressure upon spot quotes and nearby futures has recently diminished. That seemingly made the winter wheat contracts more responsive to supportive news such as Monday’s report that SovEcon had cut its Russian harvest forecast by 5.9 million metric tons (MMT) to 79.6 MMT. That news seemed to provide sustained support for HRW prices, whereas the slight Monday afternoon improvement USDA indicated for spring wheat crop conditions apparently undercut the HRS and SRW contracts. Losses posted by the corn and soybean markets likely contributed to the bearish atmosphere.

Cotton: December cotton futures posted a second consecutive inside day but edged up 24 points to 89.87 cents a pound. Prospects for the 2021 U.S. cotton harvest still look promising, although the latest USDA crop condition rating slipped slightly. Traders seem more focused on the strength of underlying demand, particularly from export customers, than they are concerned about the size of the fall harvest. Traders also await Thursday morning’s USDA export data, since that will reflect demand strength with nearby futures essentially trading at 90 cents a pound. A poor result could send prices tumbling, whereas surprisingly strong numbers may be required to power a move to fresh highs. 

Hogs: Lean hog futures settled with strong gains, led by a 2.3% rise in the October contract to $91.375 per hundredweight. August futures rose 1.6% to $109.075. Lean hog futures climbed amid persistent strength in the wholesale pork prices, which are near two-month highs. Carcass cutout values jumped another $3.05 earlier today to $131.76, the highest since June 11 and within $4 of the seven-year high of $134.94 reached June 8, USDA data showed. Carcasses on national direct markets ranged from $97 to $108, compared to yesterday’s $101 average. Additional support stemmed from nearby futures’ roughly $4 discount to the CME lean hog index, which most recently was at $112.04 for the two days ending July 30.

Cattle: Live cattle futures were led higher by the front-month August contract, which firmed $1.125. The October through April live cattle contracts posted gains of 5 to 87.5 cents. Feeder cattle finished 50 to 65 cents higher through the January contract. Buyer interest in live cattle futures was subdued for much of the morning, as traders waited to form cash cattle expectations for the week. Strength in wholesale beef prices this morning helped build buyer interest into the close. Choice boxes surged $4.06 and Select prices were $2.63 higher, though movement was light at just 56 loads. While packers are current on beef sales and don’t need to move a lot of product, the strong price recovery has us on watch for when the market gets to a level where retailers start to balk, which would suggest a short-term top is in place. Cash cattle activity has been very light so far this week.

 

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