- Interesting movement on deliveries
- China & food shortages
- New month
- History repeating itself month to month
- Wheat purchase from China
CLOSINGS & CANCELLATIONS
The market wanted to work it’s way higher on Tuesday and did in several sectors. However there was still plenty of bearish concern with increased covid lockdowns, a still clouded timeline on covid vaccine rollout and stimulus talks firing back up in Washington D.C.
On the stimulus talks the US Dollar took most the selling pressure. That has traders looking for safe haven assets like precious metals, other currencies and even crypto currency.
For the US economy stimulus is good and helps to continue feeding the bull. The problem with stimulus is the debt it creates and what happens to that debt.
Economic data out on Tuesday was mixed to promising with Red book retail sales rising 9.2% year over year. The increase in retail comes at the same time Chinese factory production hit a ten year high.
Why haven’t soybeans traded over $12? | Monday Morning Markets | Nov. 30, 2020
The grain complex continued lower on Tuesday. Wheat was again a leader to the downside with the last crop progress of 2020 showing a 3% increase in winter wheat conditions to 46% good to excellent. Nebraska winter wheat was rated 35% good to excellent. Conversely Russian winter wheat is currently rated 22% poor to very poor. There are still plenty of wheat acres in Russia to try and offset some yield loss.
Soybeans tried to mount a mid morning rally supported by the soybean meal market. The bump came with news of Argentina soybean crushers and other grain infrastructure hitting a strike with employees. Inflation is currently rampant in Argentina and workers want increased compensation to help offset the inflation. There is currently no end in sight to the strike. This could endanger some of Argentina’s soybean meal market share.
Corn is caught in the middle between wheat and soybeans. The cash market is still strong as end users want to ensure they have plenty of supply in case the South American weather story continues. Wednesday could help corn if ethanol demand and consumption increased over the thanksgiving holiday.
The general demand side of the grain market continues to be strong with USDA announcing the flash sale of 140,000 MT of corn to unknown destinations Monday morning. USDA export inspections for the week of November 26th were also strong with corn at 890,000 MT, soybeans at 2.04 MMT, and wheat at 502,000 MT. For the soybeans in particular China was the destination for about 1.67 MMT. USDA soybean exports are 44% of the entire 2020 goal which is about 10% higher than usual this time of year. Tuesday saw the USDA sale terminal go quiet as no new sales were announced.
Livestock end Tuesday mixed to mostly higher. Lean hogs weren’t able to find as much support as they did on Monday. That could come from soybeans continuing to sell. As well the carcass cutouts from USDA haven’t shown huge product movement given the large kill runs. As for cattle feeder cattle seemed to be the leader. Spreads continue to unwind against corn and pull cattle higher. It will be critical that feeders hold their nearby highs. You can hear Mike Zuzolo, Global Commodity Analytics, expand on this in his midday market commentary below.
Cash cattle in the country is quiet on Tuesday afternoon. Southern asking prices have been established at $112-$113 live. Northern prices aren’t established, but believed to be around $174 dressed. There was a few bids on Monday steady with last week’s cash, but that seems to be gone on Tuesday. Wednesday may once again kick off the cash trade with the fed cattle exchange.
For the week ending November 21, 2020, Imported Beef Passed for Entry in the U.S. totaled 37,488, 93.84% of the previous week and 95.66% of the 4-week average.
Expected Slaughter numbers Tuesday
121,000 hd today 121,000 hd wk ago 121,940 hd yr ago
495,000 hd today 495,000 hd wk ago 496,416 hd yr ago
Midday Carcass Value Tuesday
Choice dn 0.34 243.34
Select up 1.69 224.12
C/S Spread 19.22
Carcass dn 2.35 77.74
Bellies dn 3.58 95.66
Pre-Opening Market Broker Commentary
Dan O’bryan, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Grains tried to move higher in the overnight trade.
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Cash looks to be higher this week with packers already bidding at last week’s money.
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Soybeans put new lows in at midday with weakness in the meal and wheat markets.
John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Grains pull back, but Payne still see’s a buyers market.
Jack Fenske, York Commodities, looks at the closing market numbers.
2. How is the export demand looking for corn and soybeans?
3. Are you concerned about the rumors of China cancelling soybean purchases?
4. How is the ethanol demand for corn looking?
5. How does South American weather look?
6. What potential problems does the drier conditions in South America Produce?
7. Are corn and soybean prices overvalued or undervalued?
8. Do you think the prices of corn and soybeans go higher?
9. What do you think happens to basis levels?
Arlan Suderman, Chief Economist for Stone X, joins the Fontanelle Final Bell on Wednesday. Being the last full trading day of the week with no markets on Thursday and a half day Friday traders looked to take profit in the grain markets. As Suderman explains traders are likely stepping away from the office for the next few days and don’t want too many positions exposed to headlines while they are away.
The supply side of the story continues to be in control for the grains though with South America still in the grip of La Nina. However Suderman warns that previous La Nina’s have shifted enough moisture into Northern Brazil to help offset Southern production losses.
The broader market is also very active currently with traders working between increasing lockdowns and vaccine hopes.
Catch the full conversation with Suderman here:
In a year where the Covid-19 pandemic seemed to close businesses and put a damper on events. Nebraska farmers of corn, dry edible beans, and sugar beets saw a good harvest and production.
Nebraska Department of Agriculture (NDA) Director Steve Wellman says this year’s harvest has success written all over it.
Tuesday saw mostly higher grain prices. Soybean bulls had to fight back the bears to make limited gains on the day. Darin Fessler, Lakefront Futures and Options, highlights that soybeans continue to have the strong weather story and Chinese demand that keep bulls in charge. However Fessler encourages producers to have plans and targets in place in case the commodity market quickly shift. Fessler reminds listeners of what happened 4 plus year ago when commodity prices were near similar levels.
Fessler also looks into the current cash market which continues to encourage selling the physical commodity. The market offers little carry between contract months and Fessler believes there might be better options to sell the grain and own paper to take advantage of higher moves in the market.
The broader market on Tuesday was feeling fairly risk on with the DOW Jones hitting 30,000 and crude oil up over 4%. Yet Fessler doesn’t see the current rally in commodities as inflation rather the result of production concerns combined with strong demand. For Fessler this means there is still room for commodity inflation in 2021.
You can catch the full conversation with Fessler here:
Grains and livestock start a holiday shortened week well within the green. South American weather is still dry and demand looks strong. These fundamentals continue to feed the soybean bulls. With continued strength in the soybeans the broader grain complex is moving higher with positive sentiment. Mike Zuzolo joins the Fontanelle Final Bell on Monday and outlines what can continue to support these bullish fundamentals. Zuzolo also highlights what data could swing the market to sell into current overbought signals.
Zuzolo also breaks down what farmers and ranchers should be watching in the energy market. 2021 already holds a lot of unknowns that could impact energy production and demand. Therefore ag producers need to be aware of their fuel needs and how they can address that risk.
The Fontanelle Final Bell ends on a livestock note with discussion on how protein demand could be different this holiday season.
Catch the full program here: