Tag Archives: corn

What is going on in the cattle market & how do we survive it?  Friday finished another limit down day.  How do we recover?  Recap of the cash markets this week.  What is the packers story from their side?  Hogs also see a limit down trade.  Talk of China recover from COVID-19 they will need the proteins.  Drop in the corn market.  Energy is pulling the market lower.

 

 

Summary

Wow-what a difference one week can make in the feeling of the market. Last week we were writing of the massive selloffs in energy, and equities. Then how those sales were starting to take the entire market complex along for the same ride. Flash forward to Friday’s close and the market is a little more resilient and not quite as jumpy. This week we saw the biggest one day increase in the DOW Jones Industrial average and the first 3 straight higher closing session in the equities for nearly a month. Friday did see the equities close in the red as traders secured profit ahead of the weekend. In all though the DOW had it’s best week since 1938 gaining almost 13% or over 2,400 points.  Covid-19 is still a very real danger to not only the global population, but to the global economy. Some of the first economic data is now starting to emerge and as one analyst put it, “We are staring off of the cliff into the Covid-19 disruption abyss.” There are still hard times ahead and the markets will probably continue to be volatile in the near term as there are still plenty of unknowns in the whole situation.

VIDEO: Watch the latest adipose of Trading Bits and Bytes with special guest John Payne

 

As for the grains wheat was the leader on the week. May Chicago wheat gained 5.9% or about 32 cents on the week. Kansas City wheat’s May contract gained 3.8% or about 18 cents. Globally wheat has a couple stories shaping up that look to help propel it forward. The first being a killing freeze in Ukraine this week. So far Ukraine’s ag ministry has been quiet to mention any damage, but we could see it’s impacts in the coming weeks. Russia’s ag ministry also announced it plans to limit grain exports to 7 MMT through May 1 st as a way to ensure domestic supply and price amid the pandemic. This could help swing global wheat purchasers to the US.  China also helped to put a little feed in the wheat bulls being the number one buyer in this week’s export sales. The May corn contract was probably the slowest moving contract of the week only gaining about 2 cents or 0.65%. Corn was slightly higher going into Friday, but news that Russia and Saudi Arabia haven’t even met to try and quell their price war sent oil futures lower. Low crude oil and RBOB unleaded gas prices will continue to plague the corn market. Several ethanol companies around the country have pulled their cash corn bids and are preparing to idol plants until margins start to improve. Soybeans gained 2% or about 19 cents on the week. Labor issues and dry conditions in South America continue to help keep American beans viable in the global market. With an easing of the US dollar index on Thursday US soybeans will continue to try and remain competitive.

For the week ending March 19th China was a big grain buyer. Wheat net export sales were at 740,000 MT up 73% from the 4 wk average. China was the top buyer at over 200,000 MT. Corn net sales were at 1,814,300 MT, a marketing year high,  up 81% from the 4 wk average. China again the top buyer at 756,000 MT. Soybeans saw net sales of 904,300 MT up 43% from the previous week. Unknown destinations were the top buyer at 406,100 MT followed by China at 199,300 MT. 

Iraq’s trade ministry is saying the country will need 1 MMT of wheat in 2020 up from the 750,000 MT of wheat purchased in 2019.

Friday morning 2 flash sales came from USDA. The first 114,048 MT of corn sold to unknown for 2019-2020 marketing year and then 63,290 MT of soybeans sold to Mexico for 2019-2020 Marketing year. On Wednesday USDA announced the sale of 138,000 MT of corn sold to unknown and 20,000 MT of soybean oil sold to South Korea. Both sales were for the 2019/2020 marketing year.

The President of the Renewable Fuels Association has put a possible number to the demand destruction caused by plummeting RBOB unleaded gas futures. The RFA says that by the end of the week 2 billion gallons of annual ethanol production could be gone. Poet the largest ethanol producer in the US pulled their cash corn bids as they look to idol plants after they use up current stocks.

The good news on the ethanol front is that the EPA did not challenge a court decision limiting the agencies ability to grant the small refinery waivers.

According to EIA data for the week ending Mar. 20, ethanol production dropped 2.9%, or 30,000 barrels per day (b/d), to 1.005 million b/d. That is the lowest volume since October 2019.
Ethanol stocks also dropped 1.9% to 24.1 million barrels for a seven-week low.

 

Livestock futures gave up a good chunk of the weeks gains with feeder cattle closing all limit down. Live cattle and lean hogs also had  expanded limit lower contracts. To start the week live and feeder cattle surged locking limit up on the Open both Monday and Tuesday. Livestock futures started pumping the breaks mid week.  Wednesday brought a mixed close with selling and even limit down moves on Thursday. Traders are mixed on whether the current surge in demand can last. On one hand food service retail is down considerably given the number of restaurants and food services forced to close dining rooms and move to delivery and curb side service only. On the other hand meat counters haven’t been able to keep up with customer demand. The concern there is when freezers are full will demand suddenly and sharply disappear as customers try to consume their new purchase. In the midday cutouts beef saw load movements at 99 that is the first time it’s been below 100 in about 10 days.
The latest quarterly hog and pigs report shows the already large US hog herd has increased 3% in comparison to March 2019. This comes as more piglets are surviving rather than more sows being added to the herd. Either way there’s plenty of pork and supply is a key topic for traders. Luckily in this time of great supply China has been a big customer. Outside of one week when they canceled 45,000 MT due to logistical issues China has consistently bought and shipped 15,000-23,000 MT a week.

For the week ending March 19th showed mixed results for pork and beef exports. Pork net export sales were up 89% from the 4 week average at 38,600 MT.  Mexico was the top buyer at 11,100 MT and China was second 9,500 MT. China was the top destination for pork exports that week at 23,000 MT.  Beef net sales were 14,500 down 12% from the 4 week average. South Korea was the top buyer at 7,200 MT. Japan was the top destination at 7,100 MT. 

Sale barns continue to note that there is strong demand in the country for light weight grass type cattle. Winters Livestock in Dodge City Kansas noted that their Wednesday sale saw steers and heifers $10-$13 higher. Overall receipts are lighter in sale barns across the country as producers hold amid the market turmoil.

In the country there was light trade until Wednesday when the majority of business occurred. There was a very light trade on Friday afternoon.On the week the full range of Southern live business this week was $116 to $122, mostly $119 to $120, $9 to $10 higher than the previous week. Northern dressed deals ranged from $180 to $191, mostly $190, roughly $17 higher than the week before.

 

Slaughter numbers Friday

Cattle

120,000 hd today 120,000 hd wk ago hd 106,959 yr ago

Saturday

70,000 hd Sat. 69,000 hd wk ago 34,530 yr ago

 

Hogs

492,000 hd today 493,000 hd wk ago  464,026 hd yr ago

Saturday

2727,000 hd Sat. 310,000 hd wk ago 143,527 hd yr ago

 

Midday Carcass Value Friday

Beef

Choice dn 1.46 252.11

Select dn 0.56 241..61

C/S Spread 10.50

Loads 99

Pork

Carcass dn 2.85 74.76

Bellies dn 2.01 50.33

Loads 170

 

Grains Settlements

  • Corn dn 2 1/2 – 4
  • Soybeans dn 9 up 1 1/4
  • Chicago Wht up 1 – 2 1/4
  • Kansas City Wht dn 1/2 up 3/4

Livestock Settlements

  • Live Cattle dn 2.55 – 4.50
  • Feeder Cattle dn 4.50
  • Lean Hogs dn 2.02- 4.50
  • Class III Milk dn 0.43 – 0.66

Pre-Opening Market Broker Commentary

Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today.


Jerry Stowell, Country Futures,  looks at what may impact the livestock futures today. Stowell again see’s limit bids and explains why some traders may be attempting to spoof the pre-open.


Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Zuzolo isn’t concerned on today’s slide. He see’s technical factors in the short term trade, but long term fundamentals helpful to the market.


John Payne, Daniels Ag Marketing, looks at the grain settlements.


Jack Fenske, York Commodities, looks at the closing market numbers.

Market chatter is still about COVID-19, Wheat bounced backwards today, a breather was expected.  Ethanol markets does not feel good. Are we going to see a dump in corn?  Will quarterly stocks or planting intentions help the market?  Will next week’s reports set the tone?   Cattle have been giving back a bit.

 

It’s an off day in the market trade…except for the wheat market that has been on fire.  Corn did have a bounce in recovery.  Meat & wheat going hand in hand.  Ethanol might have a part in that.  Soybeans are confused.  The meal market and demand are a big part of it.  Aid for farmers coming from DC.  Weather concerns in South America.

 

Light selling in the wheat…how did that effect the corn trade?  Oil & ethanol concerns.  How soon will we be back to normal? Planting intentions report due out at months end.  Could we see increase in unplanted acres?  Corn/bean ratio and what are we seeing in the basis?  Cattle market on expanded limits, one needs the other.  Is Tyson’s announcement effecting the markets?

 

It was a good market day with positive Ag markets.  Stock market wasn’t the best, Dow down.  Double digit increases in soybeans & Chicago/KC wheat.  Sue looks at the money leaving the stock market on rallies.  Money will find safety.  Ag could see a good return on their investment.  Packers are offering certain bids…but a bill in the house will focus on bottom prices for cattle to be purchased.  Will we see decreased numbers in next cold storage report?  Thoughts on the planting intentions report while looking at some new grain movement issues out of South America.

 

 

Just when you thought the markets couldn’t get anymore uncertain.  Always has had the feel the markets should trade…people need to have the opportunity to sell. Under the surface is the global supply system, ag has had issues with ports not being open, people not being able to get food-food reserves of the past seem to have gone away.  The feeling could be a strong behavioral change.  Smart Money insider buying currently being seen in the KC wheat, MN wheat, bean oil, lumber and live cattle markets. Class IV milk had some limit up action. 

What is the current situation in the corn and soybean markets?
Do you think the worst of the Coronavirus is behind us? What could the signal that Coronavirus’s impact on the market is coming to an end? What does it take for the crude oil market to go higher?
How concerned are you about the ethanol Industry? Do you think today’s move higher in the markets means we are going higher from here? Do you think the short-term lows are in the corn and soybean markets? How much lower do you think we can go? What are some surprises the could help the corn and soybean market go higher?

Dow drops again. It’s hard to ignore what is going on in the ethanol market. BUT there are several positives in the market trade. Rumors that China is buying wheat. Wouldn’t take much to flip the balance sheet. DDGs another long term positive. Farmers can lock in some interest rates on their loans, lock in fuel needs, could see a reduction in input costs for this year’s crop. Cattle has been something else of late. But there are some encouraging signs coming from the trade. Strong product demand.