News Source: SPC

Top Farmer Closing Commentary 11-13-20

CORN HIGHLIGHTS: Corn futures ended with modest gains of 1 to 2-1/4 cents. For the week, December corn gained 3-3/4 cents, finishing at 4.10-1/2 after scoring a new high of 4.28. Corn export sales at 38.5 million were termed supportive. Sales year to date at 1.345 billion are compared to 491 million at this same time a year ago. This week’s revised USDA forecast is for annual sales to reach 2.650 billion bushels, meaning that less than three months into the marketing year sales are 51.2% of the total. Bullish traders will argue that this week’s supply and demand report had a very favorable tone and that places have plenty of room to work higher. Any weather disruptions in the southern hemisphere and futures could make a run toward 5.00 or higher. Bears on the other hand will argue that the market received very favorable news, made an initial rally, and then after reversing on Wednesday looked weak with prices down near double digits on Thursday. It is likely both bulls and bears have good arguments but ultimately the trend of carry out is downward in the trend of price remains upward with prices holding channel line support this week.

SOYBEAN HIGHLIGHTS: Soybean futures closed the week on a firm note with most futures up 2-1/2 to 9 cents as November 2021 lead today’s gainers, closing 11.40, a new contract high finish. Nearby November gained 43 cents on the week, finishing at $11.41-1/2. An unexpected drop in yield on Tuesday’s Supply and Demand report by one bushel an acre from expectations, and consequently reduction in carryout, provided support this week. Soybeans stocks to usage is now 4.2%, versus 13.2 last year and 22.9% in the 2018/19 season. Projected carryout is now 190 million bushels, well below 900 from two years ago. The trend remains smaller, and some analysts are suggesting carryout could drop an additional 50 to 100 million bushels due to strong exports. In the end, what it really means is that there’s no room for error either in South America or the US on upcoming crops. Forecasters are increasing rain chances into next week for most of Brazil, and this may have put a damper on additional favorable price activity this week. Strong world vegetable oil prices and thoughts that China may continue to buy US beans are factors providing additional support. We believe it likely that soybean futures will surpass 12.00. The new crop soybean to corn price ratio (November 2021 soybean price divided by December 2021 corn price) is 2.57. It is generally thought that a ratio of 2.45 or higher has farmers planting more soybeans.

WHEAT HIGHLIGHTS: Dec CHI futures up 5 1/4 cents, closing at 5.93 1/2, and March up 4 3/4, closing at 6.02. Dec KC wheat up 8 cents, closing at 5.52 and March up 7 3/4, closing at 5.60 1/2. It was a choppy week for the wheat market, but all in all there is a negative tone to the charts, with a weekly loss of 8-1/2 cents for Chicago Dec, and down 7-1/4 for the week for Dec KC. There’s no big news to explain the week’s loss except for that there’s no real “new news” period. This week the USDA released a benign report regarding wheat. USDA wheat carry out at 877 mil bushels versus 883 mb in Oct. USDA world carryout numbers were 320.4 mmt versus October 321.4 mmt. The cat had been out of the bag long ago regarding the situation in Russia and drought. This week Russia announced there would be no quota imposed on exports until sometime in February. As bullish as that might sound, the market maybe believed that would happen in January. Despite having record high prices, for Russia to kick that can a month further down the road isn’t bullish by any means. Crop Progress report told us that winter wheat is 93% planted – 45% is in good/excellent condition. Worth noting that Kansas is in 31% good/excellent, but already 23% of the crop is rated poor to very poor. That keeps the spotlight on those concerned with next year’s production numbers. With that said, prices are likely to stay somewhat supported as weather continues to keep production fears out front and center for the wheat crop. However, seasonally it is not uncommon to see wheat retrace at this time of year as wheat moves into dormancy. However, one should not write off the biggest outside market mover that affects seemingly everything right now, Covid-19. How the US progresses moving into the fall/winter and how a potentially new Presidential administration directs things in upcoming months could certainly impact wheat in unforeseen ways.

CATTLE HIGHLIGHTS: Cattle futures had a disappointing Friday close as contracts had strong losses. The December live cattle contract lost 2.050 to 109.925, and February dropped 2.575 to 112.225. Despite the weakness on Friday, December cattle did finish the week higher, gaining 1.275, while February was 0.075 firmer. Cash trade was complete this week at 3.00-4.00 higher over last week at 110.00, but early week expectations of 112.00 not being reach was disappointing and triggered long liquidation. Front month futures fell back to support at the 100 Day moving average on the close. In addition, concerns regarding the resurgence of COOVID-19 and potential impacts weighed heavily on the livestock sector. Retail carcass values had a strong week with the Choice carcasses gaining nearly $9.00 in value. At midday, choice carcasses were softer by 0.06 to 226.44, while select carcasses were 1.57 higher to 209.81. Demand has stayed moderate with 114 loads moving at midday. Weekly export sales did slip back off last week to 14,300 Mt, down 30% from last week. Encouraging that China was the largest buyer at 3,500MT. The question going forward is about today’s price action – was this a correction on Friday trade, or a turn in the charts. Next week will be key in direction with fundamentals staying favorable versus today’s soft technical close.

LEAN HOG HIGHLIGHTS: Hog futures finished with strong losses on Thursday, as selling pressure weighed on the livestock complex. December hogs dropped 0.900 to 64.900, and February hogs lost 2.150 to 64.575. For the week, December hogs were unchanged, but February hogs were 2.450 lower. Weekly pork export sales for last week were at 58,600 MT of 2020 and 2021 combined; this was up from last week’s totals. China stayed active in the market by adding 30,500 MT for both years combined. It is important to see the Chinese sales start moving into 2021. Despite those numbers, hog futures saw selling pressure that weighed across the livestock sector and technical weakness on the move lower. Fundamentals have stayed questionable. The lean hog index was 0.05 lower to 71.32 and is trending lower. The index is still at a premium to the December contract, which did support the price. Pork cut prices stayed soft losing 2.47 at midday to 80.61. This has hog carcasses trending lower, losing over 5.00 this week in value. Product movement stayed active and should stay that way going next week with cutout values at the 80.00 level. Supply side stays ample with estimated slaughter at 2.4 million head this week. Those strong slaughter supplies have been a lid on the market, as well as the concerns of COVID-19 resurgence globally and in the U.S. this week.

Top Farmer Midday Update 11-12-20

CORN

  • Dec corn down 9 @ 4.08 & March down 9 @ 4.18
  • Weather friendly, harvest should wrap up this week
  • Argentina & southern Brazil dryness continue to be of concern
  • Ethanol production avg 977K barrels – down 5.15% from last yr
  • Funds net sellers of 20K contracts – Preliminary O/I +5,500 contracts
  • March support @ 4.22 – resistance @ 4.36

SOYBEANS

  • Nov down 11 @ 11.32 & Jan down 12 @ 11.41
  • Through end of November Argentina expected to stay dry
  • Palm oil rose to contract high – highest price since 2012 on declining production
  • Funds incredibly long, could be 275K+ by week’s end
  • Funds net buyers of 11K contracts – Preliminary – O/I Jan -2,200 contracts
  • Jan support @ 11.18 – resistance @ 11.62

WHEAT

  • Dec Chi down 8 @ 5.90, Dec KC down 10 @ 5.44, Dec MNPLS down 5 @ 5.50
  • Paris milling futures higher today, due to declining domestic supplies
  • Despite stocks being tight, Russia will not impose any export restrictions until February
  • U.S. wheat prices still over-priced, but Russia is at record high prices in comparison
  • Funds net sellers of 8K contracts SRW – Preliminary O/I -2,900 SRW & -2,300 contracts KC
  • May Chi support @ 6.00 – resistance @ 6.15, May KC support @ 5.61 – resistance @5.82

CATTLE

  • Dec LC down .35 @ 112.07 & Nov FC down .35 @ 140.27
  • Concern that light packer interest may limit cash market gains
  • Support from boxed beef prices increasing
  • Corona still pressures market as new highs are set for infection cases
  • Projected slaughter for today est. at 121K head
  • Cash prices developing around 112-114 for LC & 135.97 as of 11/10 for FC cash index

HOGS

  • Dec Hogs up 1.12 @ 65.92 & Dec Pork Cutout up .85 @ 81.82
  • Commercial buyers enter keeping support above 65.00
  • December futures almost even with February – 1.00 difference
  • Hog slaughter 490K estimated today
  • Cash lean index @ 71.37 as of 11/10
  • O/I: -6,687 contracts for Dec

Top Farmer Midday Update 11-11-2020

CORN

  • Dec corn down 4 @ 4.19
  • USDA puts US ending stocks at 7 year low, 1.702 bb
  • Corn put in a contract high of 4.28 yesterday
  • Prior to yesterday’s report Managed money funds expted to be long 325K+ contracts
  • Argentina port workers far from compromise, impacting shipments
  • Funds net buyers of 57K contracts – Preliminary O/I +33,600 contracts
  • March support @ 4.29 – resistance @ 4.36

SOYBEANS

  • Nov up 5 @ 11.43 & Jan up 4 @ 11.50
  • USDA dropped ending stocks to a tight 190 mb
  • Palm oil futures continue to put in new contract highs
  • US primary source of soybeans until Feb. harvest in S. America
  • Yesterday’s O/I indicates funds could be inching toward 500K+ contracts long
  • S. American dry weather continues to be focal point
  • Funds net buyers of 33K contracts – Preliminary – O/I Jan 14,300 contracts
  • Jan support @ 11.45 – resistance @ 11.62

WHEAT

  • Dec Chi down 7 @ 6.01, Dec KC down 4 @ 6.01, Dec MNPLS down 1 @ 5.59
  • USDA lowered ending stocks to 320.5 mmt (still record high number)
  • US ending stocks only fell 6 mb to 877 mb
  • Ukraine & Russia drought extending continue to lend support
  • Funds net buyers 9K contracts SRW – Preliminary O/I -4,400 SRW & – 1,600 contracts KC
  • May Chi support @ 6.04 – resistance @ 6.28, May KC support @ 5.61 – resistance @5.91

CATTLE

  • Dec LC up .42 @ 112.30 & Nov FC down .67 @ 140.17
  • Cattle continues to be patient to see if cash prices develop higher off of last wk’s prices
  • Boxed beef up $8 from Friday at $222.25 – Selects up $10 at 208.55
  • Corona still pressures market as new highs are set for infection cases
  • Projected slaughter for today est. at 120K head – even with last year
  • Cash prices undetermined for LC & 135.85 as of 11/9 for FC cash index
  • O/I: -10,316 contracts for Dec LC & O/I: -263 contracts for Nov FC

HOGS

  • Dec Hogs up .40 @ 65.52 & Dec Pork Cutout up .35 @ 81.60
  • Oct high of 72.80 remains unchallenged
  • Cash lean index continues to narrow in comparison to futures
  • Yesterday pork carcass reported at 82.98 – down 1.08 from Friday
  • Hog slaughter 454 estimated today
  • Cash lean index @ 71.25 as of 11/9
  • O/I: -9,170 contracts for Dec

Top Farmer Closing Commentary 11-6-2020

CORN HIGHLIGHTS: Corn prices traded both sides of steady with Dec futures down 2-1/2 cents finishing the day at 4.06-3/4. Deferred months ended the session mixed. For the second day in a row, futures rallied early only to give up most of its gains. The net change for Dec futures since Wednesday’s close is 1-1/2 cents. For the week, Dec futures gained 8-1/4 cents. This week saw weather uncertainty in South America and excellent export sales. Farmers selling also picked up as harvest continues to move along at a fast clip. The technical picture continues to suggest prices are consolidating and still in an uptrend. Next Tuesday, November 10, the USDA will release its monthly Supply and Demand report. Much attention will be focused on yield. The October yield estimate was 178.4 bushels an acre with the average pre-report estimate of 177.7. Some private estimates are targeting closer to 176. Additionally, at some point, the USDA will likely acknowledge stronger imports by China and consequently either reduce U.S. carryout on increase export expectations or reduce expected world carryout. Baseline acres for the season ahead were released today by the USDA at 90 million.

SOYBEAN HIGHLIGHTS: Soybean futures were the recipient of bear spreading as Nov futures closed 3-1/4 lower at 10.98-1/2 after reaching a daily high of 11.07-1/2. For the week, Nov gained 42 cents. This was impressive considering prices lost 27-1/4 in Nov last week. The weekly price range was also larger than a week ago effectively negating last week’s negative reversal. Like the corn market, soybeans were the recipient of strong export sales and weather uncertainty in the Southern Hemisphere. Conditions are expected to remain dry in southern Brazil and northern Argentina, key growing areas. Also, world vegetable oils are in tight supply and soybean oil continues to find underlying support as dry conditions may be affecting Malaysian palm oil. There are a lot of moving parts to this year’s soybean crops as well as projected supply. On Tuesday, the USDA will attempt to provide a clearer picture with the release of the monthly Supply and Demand report. Baseline acre projections were released today with an estimate of 89 million acres in 2021 and 90 million in 2022.

WHEAT HIGHLIGHTS: Dec CHI futures down 7-1/4 cents, closing at 6.02, and Mar down 4-1/2, closing at 6.09. Dec KC wheat down 7-3/4 cents, closing at 5.55-1/4, and Mar down 6-3/4, closing at 5.62-3/4. It’s been a bit of a choppy week for CHI wheat, however, CHI still gained 3-1/2 cents for the week. Meanwhile, KC had a stronger week of gains Monday-Thursday, and impressively gained over 14 cents from last Friday’s close. Large export numbers seen yesterday combined with the well-known weather concerns both in Russia & the United States continue to keep potential production concerns for next year’s crop in front of the market. Weather in Russia remains dry next week and is expected to cool off which actually will further diminish any returns last week’s rains had on the stressed crop. Over the next 14 days, hard red winter wheat is expected to get more precipitation, where exactly that rain falls, and how much will be the question of the day. Demand is staying strong, and again we (U.S.) may see some unexpected demand from China, as their beef with Australia intensified this week, with bans on wheat (among many other commodities) was made official today. So, any further wheat China needs will need to be looked for elsewhere than Australia. The USD is down again today, currently trading 92.26 looking to potentially go back to the lows of September 1 of 91.74.

CATTLE HIGHLIGHTS: Live cattle futures ended the week with positive gains as the Dec contract gained 0.300 to 108.650, and Feb was 0.700 higher to 112.150. For the week, Dec cattle finished 0.350 higher, and Feb gained 1.750. A stronger demand tone and the prospects of improving cash kept buying support in the cattle market. The retail market showed strength this week, and choice carcasses saw a positive close on Friday gaining 1.77 to 214.32, while select carcasses ended Friday softer down 0.48 to 198.49. For the week, choice carcasses gained over $4.00 in value on good choice box movement. The strength in retail supported cash this week, with most trade at $107. Friday was quiet, but with the strength in demand and more favorable futures prices, the expectation will be for firmer cash next week. Next week will be very key in seeing some additional follow through on this week’s market strength. Feeder cattle finished mixed on Friday with the Nov feeders gaining 0.125 to 137.700 and Jan up 0.525 to 135.925. Jan feeders gained 1.800 on the week. Strength in the live cattle market supported feeder this week, despite the move higher in grains. The Feeder Cash Index is slipping and could limit gains on front-month feeders.

LEAN HOG HIGHLIGHTS: Hog futures saw strong selling pressure in the front-month contracts on Friday’s trade. Dec hogs lost 2.525 to 64.900 and Feb hogs were 1.450 lower to 67.025. After small losses in Apr futures, deferred contracts traded higher this afternoon. Bear spreading was the focus of the market selling the front-month futures, but this was triggered by more defensive near-term fundamentals. The cash market stayed soft, and the lean hog index continued its downward slide losing 0.53 to 71.52. With slaughter estimates of 490,000 head/day this week, the market has ample supplies of hogs available. This has pressured the cash hog market. Retail carcass prices finished lower on Friday losing 2.32 to 84.06. For the week, carcass values were relatively stable, starting the week at 84.14. Only the pop in buying on Thursday prevents carcass values from ending the week lower. This was more than likely due to a jump in value buying as carcasses were trading near $82, nearly $14 off the most recent high of October 22. Technically, front-month charts look concerning, Dec challenging support and Feb posting a bearish reversal on the daily chart today.

Top Farmer Midday Update 10-28-20

CORN

  • Dec down 11 1/4 cent @ 4.04 1/2
  • Brazilian corn prices surpassed a 2007 record
  • Brazilian corn exports for Oct. expected to drop .55 million tons
  • Daily export sale of 207K mt – to S. Korea
  • Ethanol production averaged 941K barrels per day, +3.07 vs last wk
  • Funds net sellers of 4K contracts – O/I: +9,100 contracts
  • Dec support @ 4.09 & resistance @ 4.16

SOYBEANS

  • Nov down 16 1/2 @ 10.65 3/4
  • Recent rains help jumpstart Brazil soybean sowings
  • Daily export sale of 110K mt – to Egypt & 120K mt – to unknown
  • First notice day for Nov futures 10/30
  • Funds net sellers of 5K contracts – O/I: -22,200 contracts
  • Jan support @ 10.63 & resistance @ 10.77

WHEAT

  • Dec Chi down 7 1/4 @ 6.08 3/4, Dec KC down 4 1/2 @ 5.44 3/4, Dec MNPLS down 8 3/4 cent @ 5.52 3/4
  • Wheat futures in Paris hit a 10-day low
  • Further selling pressure today due to rains in Russia
  • US Dollar down currently at 93.50 – up .56
  • Funds net sellers of 2K contracts SRW – O/I: +5,400 contracts SRW & + 1,000 contracts HRW
  • CHI resistance @ 5.87 & support @ 6.15, KC resistance @ 5.23 & support @ 5.53 & MNPLS resistance @ 5.54 & support @ 5.61

CATTLE

  • Dec LC up .62 @ 104.70 & Nov FC up 1.52 @ 133.82
  • Covid cases on the rise keep market wary
  • Ice storm in U.S. Plains may lend support
  • Current-cut out value 163.61 (+.21 from yesterday)
  • Slaughter keeping good pace, yesterday reported 117K
  • Oct feeder cattle options/futures expire 10/29, Oct Live cattle futures expire 10/30
  • Cash prices quiet for LC & @ 133.70 as of 10/23 for FC
  • O/I: + 4,225 contracts for LC & O/I: -920 contracts for FC

HOGS

  • Dec down 1.45 @ 66.22
  • Shot-term demand factors turning more negative
  • Pork carcass fell to 88.83 – pressured by price drop of hams
  • Hog slaughter estimated at 492K – even with last year
  • Cash lean index @ 77.47 - $10+ premium above Dec futures
  • O/I: -287 contracts