CORN

Corn futures retreated 9 to 10 cents overnight after making new highs on Monday.  The grain and oilseed complexes have a “turn around Tuesday” attitude going into today as traders take a step back from trading the bull market into the Thanksgiving holiday schedule.  The pullback dropped Dec futures to 4.16-1/2 and back below the contract’s 10-day moving average for the first time in more than a week.  Demand remains supportive with cumulative 2020-21 U.S. corn exports at 364 mil bu vs 221 mil bu last year, up 143 mil bu.  USDA is projecting an 872 mil bu increase in 2020-21 U.S. corn exports with their current guess of 2.650 bil bu.   Final exports could reach 2.900 which could drop U.S. carryout down closer to 1.550.  Commercial traders are heavily short corn and Managed Money near record long while starting to roll their net long positions from Dec to March.

SOYBEANS

Soybean futures were down 12 to 13 cents overnight after making new highs to begin this holiday-shortened week of trade.  With Managed Money heavily long the complex, the market is vulnerable for setbacks, particularly with changes in South American weather.  Some long liquidation and rolling of open long December soymeal and soyoil positions before first notice is seen pushing down on soymeal and soyoil and soybean board crush margins.  Look for choppy trade after Jan beans hit the $12 mark which is a strong level of psychological resistance heading into a short week of trading activity.

WHEAT

Winter wheat futures were down 3 to 5 cents overnight; spring wheat down 1 to 2 and the dollar lower.  Technical selling in row crops is once again leading the price direction in wheat.  Wheat fundamentals remain in limbo with weaker export demand forcing Managed Money to reduce their net longs in Chicago wheat.  The drought monitor map is starting to expand in Oklahoma and Eastern Kansas, however, rains are forecasted to fall in much of the U.S. plains in the next seven days which should help ease concerns.  Yesterday’s weekly crop ratings showed 43% of the U.S. winter wheat crop was in good-to-excellent condition as of Sunday, Nov. 22, down 3 points from 46% the previous week and below 52% at the same time a year ago.  An estimated 89% of winter wheat had emerged as of Sunday, up 4 points from the previous week and 1 point ahead of the five-year average of 88%.

CATTLE

Cattle futures are called steady to higher, underpinned by a positive response to Friday’s Cattle-on-Feed numbers that spurred a gap higher open on Monday.  Plus, more friendly headlines regarding COVID and a third vaccine and therapeutics has eased some of the tensions in the market.  Yesterday’s Cold Storage report should not have much, if any impact on today’s trade in cattle.  Total red meat supplies in freezers were up 1% from the previous month but down 12% from last year.  Total pounds of beef in freezers were up 8% from the previous month and up 7% from last year.  Very light cash trade on Monday was seen at $110, steady with last week.  This is not surprising with the short holiday week and could limit gains and disappoint the market.  Choice Carcass values remain in their uptrend closing 3.25 higher to 241.60 and Select gained 2.50 to 217.48. The Choice/Select spread, at 24.12, may be reflecting a more current feedlot situation.  Feeder cattle should see some lingering strength today after closing higher supported by Live cattle. 

HOGS

Lean hog calls are mixed.  We did see some follow-through buying after Friday’s strong close on short covering and technical buying.  Futures rallied to overhead resistance and softened into the close.  This could be a short covering bounce in a down trending market as fundamentals stay negative led by heavy pork production and large slaughter runs.  Estimated slaughter last week  was 2.45million head 497,000 yesterday.  The CME Lean Hog Index was lower, down .63 to 68.14….holding a premium over December futures, and supporting the front month, but trending lower.  Retail values closed .40 lower to 77.77, again failing to hold midday gains and keeping the trend lower.  Highlights from Monday’s Cold Storage data showed frozen pork supplies down 4% from the previous month and down 27% from last year.  Stocks of pork bellies were down 21% from last month and down 57% from last year.

Author

Matthew Strelow