News Source: SPC
Top Farmer Closing Commentary 9-25-20
CORN HIGHLIGHTS: Corn futures finished with small gains of 1 to 1-3/4 cents. December closed at 3.65-1/4, leading futures higher. For the week, December futures lost 13-1/4 cents. We are approaching a very interesting time of year. Export sales are off to a great start. Early harvest results might suggest the crop will meet USDA projections or perhaps even yield higher. The USDA projected yield is 178.5 bpa. With energy prices weaker and gasoline consumption only about 90% of normal, it is feasible we could see additional downgrades to corn used for ethanol. Therefore, without continuous fund money buying corn and the likelihood that farmers will sell some extra out of the field, it gets more difficult to argue for higher prices in the near term. Much is centered around China and expectations. Recently, China indicated this year’s crops are basically in good shape. Between flooding, recent typhoon activity and estimates of another loss of 300 to 400 million bushels, not to mention high internal prices, it is hard to believe their corn crop is a bin buster. Add to that uncertainty with weather for the southern Hemisphere, and US prices are likely to remain choppy. Nonetheless, we expect it will be easier for prices to move lower during harvest and target a gap on charts which for most futures contracts in another 15 cents lower.
SOYBEAN HIGHLIGHTS: Soybean futures finished with small gains of 2-1/2 to 5 cents as, July lead today’s gains, closing at 10.02-1/4. Nearby November finished up 2-1/2 cents closing at 10.02-1/2. As you can see, there is no carry in the market, which likely suggests farmer selling out of the field will be strong, especially with a strong rally last week. An outstanding export sales pace is supportive, but harvest pressure and early feedback suggesting yields are running as or better than expected might suggest bullish traders are running out of steam. There is some thought that China, expected to import nearly 32 million metric tons, may not have much more buying left to do. Today was an encouraging day in that prices seem to hold the $10 area in November and put the skids on sharp losses in recent sessions. However, for the week, November soybean futures still lost 0.41. Keep in mind the strong upturn last week followed by this week’s downturn is due to high volatility on the heels of an already strong rally. Other items to watch will be next week’s quarterly Stocks report in which the pre-report estimate is 575 million bushels as well as harvest results. Weather developments in South America will also be important as much needed rain fell in parts of Brazil this week. A La Nina pattern is beginning to develop in the Pacific, and if it continues to progress might suggest a potential dryer pattern for parts of South America, including key growing regions of Brazil’s soybean crop.
WHEAT HIGHLIGHTS: Dec Chi futures down 5-1/2 cents, closing at 5.44-1/4, and March down 5-1/2 at 5.51-1/2. Dec KC wheat down 7-3/4 cents, closing at 4.75-1/4 and March down 8-1/4 cent, closing at 4.85-1/4. Last week wheat posted gains of 33 cents for the week, and this week the market took 30 cents of it back. Some of the bullish concerns about dry weather two weeks ago were eased this week as Argentina, Europe and the Ukraine received much needed rain. Russia, however, is the exception; it was reported this week roughly 10-15% of Russia was not even in a condition to be planted right now. Due to that fact, Russia is currently no longer the cheapest wheat on the globe. Much of the western U.S. is too dry as well. Drought is expected to spread to the southern Plains and worsen over the upcoming months, and the U.S. will likely experience planting delays for HRW this year. However, weather is favorable for winter wheat planting, and it is expected Monday’s Crop Progress report will reflect that. Yesterday, IGC (International Grain Council) repeated its estimate for 294 mmt of world ending wheat stocks, bringing us all back to the main hurdle wheat has to overcome, which is that there is still going to be plenty of it. Dec wheat currently holding support level of $5.35 but certainly dangerously flirting with it. US dollar continues to hold new support levels and looks from a technical aspect ready to break out higher.
CATTLE HIGHLIGHTS: Cattle markets closed lower on Friday, with October lives 0.450 lower to 107.575, December lives were down 0.875 to 111.400 and February lives lost 1.050 to 114.600. For the week, the October contract was 0.225 higher in overall choppy trade. The feeder market followed live cattle, with October feeders closing 1.950 lower to 140.325 and November feeders 2.200 lower to 140.150. The cattle market saw some position squaring going into the Cattle on Feed report on Friday. The report brought no major surprises but was heavy overall. Total cattle on feed as of Sept 1 was 104%, Marketings in August at 97%, but placements were at the top of the range at 109% of last year. The heavy placement number will likely put pressure on the cattle market on Monday. Weekly cash trade developed this week with $105 trade, $1-2 higher than last week. Retail carcass values were firmer throughout the week, and at midday with Choice carcasses up 1.74 to 219.22, but Select carcasses were .37 lower to 207.93. This has kept the trend firm in retail values for most of the week, supporting live cattle prices.
LEAN HOG HIGHLIGHTS: Hog futures finished strongly higher on Friday with October up 2.275 to 71.750, and December was up 1.150 to 64.425. For the week, October hogs gained 5.25. The CME Lean Hog Index was up another 0.81 to 73.70, the highest level since August 2019. The strength in the Lean Hog index brought some support to the October contract. The hog market shook off the large supply of heavy weight hogs that was stated in the Hogs and Pigs report on Thursday. Despite 180+ pounds hogs being 10% over last year in numbers, the prospects of strong demand bought buying into the hog market. Pork carcasses have been strong for the week, with Midday trade 0.91 cents higher with carcasses valued at 92.94. With more clarity on the supply side of the market from yesterday’s USDA report, the demand will stay supportive.
Top Farmer Midday Update 9-25-20
- December down 4 ¾ @ 3.63 ¾
- Basis has started to slide toward harvest levels in many areas
- Corn export wire quiet again today
- Ethanol margins are steady
- 6-10 day forecast, U.S. western Corn Belt will experience best harvest weather
- Funds net sold 17,000 contracts & Open Interest down 800
- Dec corn support 3.60 – resistance 3.71
- November up 6 @ 10.06
- Market sentiment is China may be about done buying – no sales today/yesterday
- Argentine farmer selling slow with Brazil heavily sold ahead
- Frost/freezes may occur in a part of the Midwest next week
- Funds sellers of 13,000 contracts & Open Interest down 5,300 contracts
- Nov soybeans support $9.90 – resistance $10.15
- December CHI down 4 1/2 @ 5.45 1/4, KC Dec down 7 1/4 @ 4.75 3/4 MNPLS Dec down 4 @ 5.30 3/4
- Dollar up today and profit taking putting pressure on market today
- Weekend rains in Ukraine however Russia remains dry
- Winter wheat planting will advance along with some summer crop harvesting
- 6-10 day forecast, U.S. HRW wheat production areas remain dry & warm
- Funds net buyers of 1,000 contracts of SRW Wheat & Open Interest down 2300 contracts
- Dec Chi wheat support 5.43 – resistance 5.57 & DEC KC wheat support 4.77 — resistance 4.91 & Dec MNPLS support 5.29 – resistance 5.38
- October Live Cattle up .05 @ 108.07 & October Feeders down .57 @ 141.70
- Highest weight since Nov 2015 suggest cattle are backed-up
- Focus on increased cash cattle trade & recent gains in boxed beef
- Increased cattle numbers from a year-ago levels are expected in today’s report
- Expectation that FC placements during Aug may be higher than projections
- Firming support in FC trade feeding small gains in LC market today
- Open Interest gained 1,619 positions yesterday in LC & added 321 positions in FC
- Cattle on Feed report, today @ 2:00 p.m. CT
- October up 1.60 @ 71.07
- Long term bearish forces but ash news is supportive
- Hogs up today as traders adjust positions following increased inventory levels
- Hog numbers 1% above year-ago levels & same for market hogs
- Cash hog bids expected to $1low to $2 per cwt higher
- Open Interest decreased123 positions yesterday
Top Farmer Closing Comments 9-24-20
CORN HIGHLIGHTS: Corn futures finished weaker, losing 5 cents in December and closing at 3.63-1/2. Friday’s high was 3.79-1/4. Export sales at 84 million bushels were impressive yet considered old news as a strong figure was expected after announced daily sales last week. Year-to-date sales total 890 million bushels, which compares to 360 million at this same time a year ago. Early harvest results are suggesting yield may be on the heavy side of expectations, especially where farmers thought a dry August might have more impact. The old saying is that corn is made in July. Very high crop rating through July may be showing up in yield results. Concerns on the Covid front this week may be weighing on corn prices, as gasoline demand continues to run about 90% of a year ago. There is the possibility of additional reductions on USDA reports in the corn used for ethanol category. For the most part, conducive weather in the forecast for harvest was also a negative factor on prices.
SOYBEAN HIGHLIGHTS: Soybean futures sold off into the close again, finishing with double digit losses and weaker for the fourth consecutive session. November closed 14-1/2 cents lower at 10.00. Deferred contracts were all weaker as well, closing 15 or more cents softer. How quickly the tide turns. Last week on Friday, November futures traded as high as 10.46-3/4 and closed that session at 10.43-1/2. Fund liquidation, harvest pressure with strong farmer selling, and talk that China purchases could slow all weighed on prices today, as did technical selling. Some are suggesting that China, which has an estimated 29 million metric tons on the books for imports, may only need another 3 mmt. If that is the case, funds being long near 200,000 contracts maybe shifting risk by reducing their position, especially as harvest gains steam. Early yield results seem to lean toward better than expected, especially in areas that struggled with dry weather. This morning’s export sales report indicated a stellar week of sales at 117 million bushels bringing year to date totals at 1.305 billion. Of that total, 1.175 billion bushels are unshipped. At this same time last year, sales totaled 446 million. The trade deal with China is/was a big deal.
WHEAT HIGHLIGHTS: Dec Chi futures up 3/4 cent, closing at 5.49-3/4, and March with a flat close at 5.57. Dec KC wheat down 1-1/4 cent, closing at 4.83 and March down 1 1/2 cent, closing at 4.93 1/2. Wheat net export sales were reported at 351K metric tons for 2020-21 today, which is up 5% from last week but down 34% from the prior 4-week average. Increases primarily for South Korea (112K metric tons) & Vietnam (63K metric tons). In Southern Brazil wheat areas will receive periodic rainfall maintaining good conditions for planting, support a very good wheat yield outlook. Western Australia’s continued drying is of concern; however, southeastern Australian crops are looking extremely good. Central and west Ukraine will receive some much-needed rain in the week ahead, 1-2 inches of rain expected. This of course will continue to delay planting but eases the fears (short-term) of drought in these areas. U.S. HRW wheat areas are drying down rapidly and significant rain I needed soon to bolster soil moisture for improve wheat planting. Drought is expected to expand in the southern U.S. plains moving into fall. Winter wheat planting will advance favorably along with some summer crop harvesting, some areas need rain. IGC (International Grain Council) repeated its estimate for 294 mmt of world ending wheat stocks bringing us all back to the main hurdle wheat has to overcome, which is that there is still going to be plenty of it. Dec wheat currently holding support level of $5.35 but certainly dangerously flirting with it.
CATTLE HIGHLIGHTS: Cattle markets closed higher for the second consecutive day, with October lives 0.875 higher to 108.025, December lives were up 1.075 to 112.275 and February lives gained 0.850 to 115.650. The feeder market followed live cattle, with October feeders closing 0.750 higher to 142.275 and November feeders 0.700 higher to 142.350. Thursday was the last trading day for September feeders, closing at 142.450. The cattle market has seen some buying strength going into the Cattle on Feed report on Friday. Expectation for the report are for cattle on feed as of Sept 1 to be 103.4% of last year, Placements at 105.9% of last year and Marketings at 96.6%. If those numbers are realized, it could build some selling pressure in the market with a potential large supply of feed lot cattle. Weekly cash trade has been slow to develop this week, but some movement developed last on Thursday with $105 trade in the north and bids firming to $105 in the south. This was supportive of the market and kept the cash trend higher week over week. Retail carcass values were firmer at midday with Choice carcasses up 1.71 to 217.58 and Select carcasses 0.59 higher to 208.19. This has kept the trend firm for most of the week, supporting Live cattle prices.
LEAN HOG HIGHLIGHTS: Hog futures finished lower on Thursday, with October down 0.025 to 69.475, December was down 1.075 to 63.275. The CME Lean Hog Index was up another 0.72to 72.89, the highest level since Sept 2019. The strength in the Lean Hog index brought some support to the October contract. The market took some profits before Thursday’s quarterly Hogs and Pigs report. The report was fairly in line with expectations. Total Hogs inventory up 1%, Breeding hog inventory down 2%, and Market hogs +1% from last year. The most bearish factor was the inventory of 180+ hogs, running 8% over last year and 5% above expectations. Long term farrowing intentions were in line and below last year and could stay supportive deferred prices with good demand. Export demand was softer than last week, but still strong with weekly sales of 37,800 MT, with China purchasing 8,200MT. Export shipments stay strong at 35,800 MT last week. With more clarity on the supply side of the market, the demand will stay supportive.
Top Farmer Midday Update 9-21-2020
- December down 0.8 1/4 @ 3.70, March down 0.8 1/4 @ 3.3.79, May down 0.8 1/4 @ 3.84
- Good weather may be encouraging farmer selling
- Export Inspections reported 755K mt for this week, down from last
- China still number 1 buyer for corn
- Pushing into harvest, corn could see a set-back
- Gap left to be filled on Dec corn @ 3.48-3.45
- November down 0.1825 @ 10.2525, January down 0.1775 @ 10.30, March up 0.12 @ 10.18
- Weather remains friendly for harvest
- Planted Progress report today may indicate harvest ahead of schedule
- Inspections report 1.310M mt down from last week
- China still #1 buyer of soybeans, 132K mmt sold to China this a.m.
- Seasonal trends indicate soybeans may pull back
- Technically still very over bought
- December CHI down 0.1575 @ 5.5925, December KC down .1225 @ 4.92, December MPLS down 0.1225 @ 5.3925
- USDA Grain Inspections 469.939 mmt down from last week’s
- Favorable weather pushes winter wheat planting along
- Drought expected to expand, threat to HRW crop
- US dollar is higher @ 93.76
- Corn & soybeans put pressure on all wheat markets
- October lives down 1.00 @ 106.35, December lives down 1.77 @ 110.07
- October feeders down 1.35 @ 141.07, November feeders down 1.55 @ 140.97
- Carcass weights are increasing and slaughter counts are picking up as well
- Cash cattle markets have continued to firm
- Today’s move lower, likely profit taking from last week’s gains
- October feeders are couldn’t break above 50-day moving average last week, trending closer to 200 moving day average at 140.00
- October down 0.20 @ 66.32, December down 0.80 @ 62.72, February down 0.47 @ 68.07
- Cash Index is up 1.42 @ 67.84
- Firm gains in pork cutout values
- Cash hog values lower last Friday
- Bans on German pork products will likely boost US exports
- Hog futures are overbought technically
- Tight supplies still expected for 2021