CORN
Corn futures were unchanged overnight and are up about a nickel for the week since last Friday’s settlement. Dec corn, at 4.22-1/12 is mid-range of this week’s 21-1/2 cent trading range of the contract high at 4.30-1/2 and yesterday’s intra-day low of 4.09. Technically, prices have found a home at their respective 10-day and/or 20-day, converging moving averages heading into today. Good weekly U.S. corn export sales yesterday has offset talk of rains across central Brazil, and talk of China looking at buying U.S. corn, wheat and sorghum combined with new lows in the dollar this week is supportive. China published a new draft law on management of its grain reserves on Thursday to include oversight of stocks in regions and provinces as it seeks to bolster its food security. Local governments should build up reserves of processed grains and oils of an appropriate scale in central areas of medium-large cities and regions with markets that are prone to volatility. Reserves should only be used in cases of obvious grains shortage, significant price moves, major natural disasters or other emergencies. Some feel China could import 25 mmt from all origins versus USDA’s guess of 13.0. In addition, China could import 50 mmt from all origins next marketing year.
SOYBEANS
Soybean futures traded a 9 cent, two-sided range overnight in the Jan contract between 11.63-1/2 and 11.72-1/2, bound by the contract’s 10-day moving average near 11.77 and the 20-day at 11.62. For the week, Jan, at 11.71-1/4 is down 20 cents and close to mid-range of this week’s 56-1/2 cent trading range of 11.99 and 11.42-1/2. Rains are forecasted for central and south Brazil, but the long range forecast calls for South Brazil and Argentina to see less than normal rains. Meanwhile the latest root zone moisture drought indicator map shows South America in the midst of it’s driest conditions of the past 9 years. This will help keep the steep uptrend alive heading into Tuesday’s monthly USDA report, and possibly the key January crop report. Talk of new China buying U.S. old crop and new crop soybeans is also noted.
WHEAT
Winter wheat futures were narrowly mixed overnight while consolidating Monday’s price drop and forging a fresh trading range below that of November’s ranges. In November, futures plotted a mostly sideways course along their respective 10 and 20-day moving averages. Now they’re down targeting the 100-day in Chicago and Mpls, and 50-day in KC contracts. Stats Canada data this week raised the size of the (all) wheat near 35.2 mmt vs 34.1 previous estimate and 32.6 last year, offering resistance to the market. Some money Managers may have re-established short wheat and long corn and soybean spreads.
CATTLE
Cattle futures are called mixed to lower for today. We may see some clean-up cash market activity today, but trade is mostly done for the week at $110/cwt. December options expire today with most open interest in around the $110 strike level. Carcass values were lower on the close yesterday, down 1.70 lower to 239.19 and Select softened 3.02 to 219.93. Feeder cattle weakened from live cattle markets and strong grains with the front month dipping below the key $140 level. Look for futures to struggle in the wake of steady cash, weaker retails and options expirations.
HOGS
Lean hog calls are mixed to lower after closing with a weak tone Thursday amid choppy retail demand and cash market weakness. Cash is still trending lower, and now is in line with Dec futures, which will limit the upside with contract expiration on December 14. Heavy pork production and large slaughter continues… Estimate slaughter was at 497,000 on Thursday, keeping pressure on cash. Retail values were still trending lower on Thursday, and carcasses closed 3.41 lower to 76.45. Load count moderate at 385.11 loads. This will weigh on today’s open. Export sales for last week were improved at 31,300 MT, up 66% over last week, and exports at 34,100. Mexico and China were the top buyer and receiver of products.
Author
Matthew Strelow