Top Farmer Closing Commentary 10-29-20

CORN HIGHLIGHTS: Corn prices dropped sharply on the overnight trade losing near 8 cents, rebounded to positive territory and finally weakened into the close. December futures lost 3 cents closing at 3.98-1/2, its lowest close since October 14. Export sales on the weekly sales report released each Thursday came in at 88.3 mb, and outstanding number. Year-to-date sales are now 1.203 billion bushels, well ahead of the 449 million a year ago at this same time. Yesterday’s big slide was primarily due to fund liquidation as they moved out of an estimated 52,000 long contracts. Coming into today, it was thought they were net long 193,000. This week’s technical activity looks weak, yet prices respected an upward channel line today. Most technicians would argue the market has made nothing more than an overdue correction. Fundamental support comes from continued strong weekly export sales and weather concerns regarding the southern hemisphere where it remains mostly dry. Delayed planting could mean more exports for the US. Yet, recent rains and now drier could make for good planting conditions in Argentina. Farmer selling picked up early in the week as well which is also a likely contributor to price pressure.

SOYBEAN HIGHLIGHTS: Soybean futures closed weaker with November losing 5-1/2 cents closing at 10.51-3/4, it’s third weaker close in a row. Longs look as though they are trimming positions after posting new contract highs on Tuesday. As mentioned in the corn report, much uncertainty with the upcoming election along with what should be termed net better planting and growing conditions in the southern hemisphere coupled with a week technical picture are all weighing on prices. We will continue to urge that if behind on sales get current with recommendations. It is easy to make a friendly argument for soybeans, but it likely takes some what if scenarios that need to occur to make a substantial leg higher for prices. Our bias is to be light on cash because of the price inversion. If you want to retain ownership do so through the use of call options or perhaps a bull-call strategy which involves purchasing an at-the-money call and selling an out-of-the money call. Today’s export sales at 59.6 million bushels are supportive. This brings total yearly sales to 1.726 billion, well ahead of the 704 million at this same time last year. Lastly, a firmer US dollar may have weighed on the market late in the session as the green back traded to it’s highest level in a month.

WHEAT HIGHLIGHTS: Dec Chi futures down 5 cents, closing at 6.03 3/4, and March down 4 3/4 cents, closing at 6.03. Dec KC wheat down 1 1/4 cent, closing at 5.42 and March down 1 cent, closing at 5.49. 4th consecutive down day in a row for wheat. Nothing has changed regarding weather. Much needed precipitation falling in forms of rain/snow in the U.S. Plans and rains finally landing in Russia are putting pressure on prices this week. However both areas are forecast to turn back to warmer & dry conditions starting next week, with not a lot (if any) precipitation built into a long-term forecast. Today’s monthly report from IGC reduced its estimate of world ending wheat stocks from 65 mmt to 61 mmt – still a very large number, but a slight bullish adjustment. Today’s USDA weekly exports were very friendly up 49% from last week, at 27.3 mb of wheat sold for export last week. USDA also reported that 16.3 mb of wheat were shipped last week, putting total exports up 3% in 202-21 from this time last year.

CATTLE HIGHLIGHTS: Live cattle as well as feeders finished with strong gains on Thursday as most contracts saw triple digit moves. The October Live Cattle finished .425 higher to 106.275. The last trading day for October cattle is on Friday, 10/30. December live cattle gained a strong 3.300 closing at 107.975 while February was 2.675 higher at 110.375. The prospects of improved demand going into the 4th quarter brought the strength into the Live Cattle market. A strong move higher in retail values provided buying support, as well as the involvement of China into the export market. Cutout values traded firmer with Choice trading at 207.29, up 1.50, while Select gained 1.99 to 191.57 in the morning reports. The most noticeable trend has been the uptick in Choice product movement the past couple days as retailers are looking to lock in supplies for the holiday season. Export sales last week were at 18,900 MT, which was down 13% from last week. The most noticeable point was China was the largest buyer of U.S. beef last week at 4,300 MT. A trend the market hopes to see continue. Cash trade was mostly undeveloped today, with the exception of very light $103 trade in Nebraska. The rest of the country stayed silent, but saw packer bids rise to $106 from $104 yesterday. The strength in the futures market and retail values my help build the feedlot resolve holding out for higher bids. Asking prices moved to $108-110, most likely remaining cash trade will hold off until Friday. The feeder market follow the live cattle market higher. October feeders finished their trading today, closing at 136.450 up 1.275. The new lead month, November was 1.825 higher to 135.725. the feeder market saw value buying and short covering supported by the strong live cattle market and weak grain markets.

LEAN HOG HIGHLIGHTS: Lean hogs futures finished with losses again on Thursday as December lean hogs were .750 lower to 65.625, and February hogs were .600 lower to 65.600. Charts look technically weak, and are subject to long liquidation. The December contract tried to work off session lows, but fell back into negative prices at the close. In addition to the weaker technical view, near-term fundamentals have been softening, adding to the selling pressure. Pork cutouts have been trending lower since challenging the $100 level a few days ago, but Midday today saw carcasses trade higher Carcasses were 5.04 higher at midday to 89.56, but still down significantly from recent carcass value highs. The biggest fundamental weakness has been seen in the lean hog index. Today, losses accelerated as the lean hog index softened 1.20 to 76.27. The index is still holding a premium to the December contract, which is keeping support to the December contract for now, but the near term high looks to be in for the index. The key in the hog market will be the demand. Supplies are comfortable in terms of slaughter hogs available, so will to continue to see strong product demand to maintain strength in the market. Thursday brings weekly export sales, which were at 29,000 MT for last week. This was up 8% over last week, but China was a small purchaser at 2,500 MT. The impression of softening demand from China weights on the deferred futures prices.

Market Commentary provided by:

Total Farm Marketing
137 South Main Street, West Bend, WI 53095
Phone: 800-334-9779