Tag Archives: markets

Summary

Going into midweek markets are mixed, but trying to stay hopeful. There continues to be rumors that the Treasury department and Democratic leaders in the house are close to a deal on another round of stimulus. President Trump has even come around to the idea of a big aid package, but the senate is still wanting to try and keep things tight for the balance sheet. Which they may not be wrong in thinking that way. Currently the US debt load sits around $27.1 trillion dollars. While the Federal Reserves balance sheet sits close to $7.2 trillion dollars. That leaves a big question up to the FED of if and when a stimulus package gets passed should it increase its bond buying program to create demand for the extra debt needed to fund any stimulus program created by Congress.

However the FED decides to fund the next round of stimulus it’s likely to be good for commodities as the FED’s whole goal is inflation above 2% to cancel out the deflation currently happening. With the current stimulus and other aids provided to the economy in 2020 M1 money supply (money most readily available to people and investors) sits at at $5.5 trillion, up from $4 trillion in late February. That money is still in the economy and fund managers have been able to attract quite a bit of the money. With that they favor equities and grain commodities.

In the grain complex midweek the bulls seem unstoppable. There also isn’t one solid leader to the rally. You can pick any grain and make the story for why it may be pulling the complex higher. Dry conditions continue around the world, but are starting to change this week. In the US the Northern plains Eastern corn belt are in the cross hairs of moisture. This could slow down a fast paced harvest. On Monday the latest crop progress data showed that 60% of the US corn crop has been picked and 75% of the beans cut. In South America the wet season may finally be getting started. Soybean plantings are rolling right with the rains now 32% complete in Brazil. The thing to keep in mind with the delayed plantings in South America is that it will delay harvest and may keep US soybeans in the market for a few more weeks at the beginning of the year. The Southern plains in the US continue to be dry and that is not good for the growing winter wheat crop. Similar conditions are also continuing in Russia and the Black Sea growing region. This comes as the harsh Russian Winter starts to set in and could kill out as much as 10% of the winter wheat crop.

Other factors helping US grains at least is a friendly currency market. The US Dollar Index is testing recent lows this week. The Chinese Yuan and Russian Ruble have  been able to experience a recent run up given the weakness in the dollar. The biggest thing that could threaten the weak dollar though is the Presidential election which is drawing near.

USDA’s export sale terminal fired up on Monday announcing two flash sales. The first 345,000 MT of corn sold to unknown and the second 123,000 MT of corn sold to Mexico. Tuesday unknown destinations purchased 132,000 MT of soybeans. Wednesday the flash sale terminal was silent.

In the livestock complex, Monday ushered in risk off momentum for cattle that spilled over into lean hogs as well. The selling could be the result of longs buying into the short placements in April and May not seeing a downshift in production. Fewer cattle yes, but similar pounds of beef. With the fall run on and money seeming to favor the grain complex over livestock managed money is starting to move to the sidelines allowing the bears into the market. Tuesday did see a turnaround though and some losses regained in cattle. Wednesday will be a test to see if cattle can defend those gains. As for the lean hogs Tuesday brought another round of selling, but that could quickly turn around as traders continue to see strong demand for pork.

With cattle futures moving into risk off mode cattle feeders focused on basis started to move cattle early in the week. Monday saw light trade develop in the South at $106, $2 lower than the prior week’s weighted averages. A few scattered deals were reported in parts of the North at $165 to $166, $2.50 to $3.50 lower than last week’s weighted average basis Nebraska. Tuesday saw another round of light trade develop in Kansas at $106 live.

The Fed Cattle Exchange Auction today listed a total of 1,096 head, of which 702 actually sold, 394 head were listed as unsold, and none were listed as PO (Passed Offer). The state by state breakdown looks like this: KS 184 total head (1 lot), with all 184 head sold at $106.50; NE 394 total head (2 lots), with none sold; TX 518 total head (3 lots), with all 518 head sold at $106.25 to $106.50. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 558 head total, of which all sold, with a weighted average price of $106.50; 1-17 day delivery 538 head total, of which 144 head sold, with a weighted average price of $106.25.

For the week ending October 10, 2020, Imported Beef Passed for Entry in the U.S. totaled 37,136, 87.18% of the previous week and 90.73% of the 4-week average.

Expected Slaughter numbers Wednesday

Cattle

121,000 hd today 120,000 hd wk ago 118,638 hd yr ago

Hogs

487,000 hd today 487,000 hd wk ago 493,189 hd yr ago

Midday Carcass Value Wednesday

Beef

Choice dn 0.95 209.65

Select up 0.30 191.97

C/S Spread 17.68

Loads  124

Pork

Carcass up 1.05 97.96

Bellies dn 5.16 172.52

Loads 178

Grain Settlements

  • Corn dn 3 3/4 up 5
  • Soybeans up 2 1/4 – 8
  • Chicago Wht dn 2 1/4 up 3 1/4
  • Kansas City Wht dn 3/4 – 1 1/4

Livestock Settlements

  • Live Cattle dn 0.87 up 0.30
  • Feeder Cattle dn 0.45 up 0.37
  • Lean Hogs dn 0.82 up 0.27
  • Class III Milk dn 0.10 – 0.64

Pre-Opening Market Broker Commentary

Dan O’Bryan, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. No USDA flash sales on Wednesday, but that may not bother the grain bulls.


Jerry Stowell, Country Futures,  looks at what may impact the livestock futures today. Cattle continue to try and recover Monday’s losses.


Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Midday weather forecasts are impacting the wheat market.


John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Grains don’t want to stop their march higher. No John Payne 10-21


Jack Fenske, York Commodities, looks at the closing market numbers. Fenske is closely watching soybeans to see if they are shaping up for a break out to the upside or downside.

Sir Isaac Newton may have best explained Monday’s market action when he created his theory of gravity, “What goes up must come down.” After a strong week of rallies capped off a friendly USDA report, follow through support was no where to be found in the soybean complex.

PJ Conradt, Tredas, joins the Fontanelle Final Bell to discuss the technical and fundamental factors that pushed the markets lower. Conradt though is excited to see for the first time in years farmers are getting an opportunity to market their grains into healthy cash market with strong basis.

Catch the full conversation here:

As expected USDA and the World Outlook Board lowered their predictions for US production of corn and soybeans. Soybean ending stocks were also reduced giving bulls there added incentive to continue buying. USDA also excluded 550,000 acres of corn in Iowa due to the derecho wind event.

Wheat may be the biggest loser on the day with USDA raising it’s estimate of Australian production. US and global stocks also appear to be plentiful for wheat.

 

 

US Corn & Soybean Production 2020 Millions of Bushels September Average Range USDA August USDA 2019
Corn 14,900 14,833 14,625-15,095 15,278 13,617
avg. yield 178.5 177.7 174.8-181 181.8 167.4
Soybeans 4,313 4,286 4,192-4,391 4,425 3,552
avg yield 51.9 51.6 50.5-52.9 53.3 47.4
US 19-20 Stock Pile Millions of Bushels September Average Range USDA August
Corn 2,253 2,271 2,128-2,756 2,228
Soybeans 575 605 561-664 615
US 20-21 Stock Pile Millions of Bushels September Average Range USDA August
Corn 2,503 2,439 2,152-2,697 2,756
Soybeans 460 461 379-576 610
Wheat 926 926 900-948 925
World Stockpiles19-20 Million Metric Tons September Average Range USDA August
Corn 309.2 311.7 309.1-317.5 311.3
Soybeans 96 95.6 94-96.5 95.9
Wheat 299.8 302.8 299-316.8 300.9
World Stockpiles 20-21 Million Metric Tons September Average Range USDA August
Corn 306.8 310.4 304-317 317.5
Soybeans 93.6 93.2 89.5-100 95.4
Wheat 319.4 316.1 313.1-319 316.8

Sam Hudson with Cornbelt Marketing joins the Fontanelle Final Bell as the markets get back to work after the Labor Day holiday. In the grains they essentially picked up where they left off last week. Soybeans notched their 11th consecutive higher close. The rally partially driven by strong Chinese demand. However Hudson is cautious to ride the Chinese demand bull to far because China has spoken for a lot of grain, but has not taken a lot of delivery yet.

Hudson also covers how the current moisture and cool temperatures could impact markets. Overall he expects the impact to be negligible as the moisture may be a little to late and frosty temperatures not too damaging.

Catch the full episode here: