Mid week and a new month starts that seems to be trying to bring in some optimism for the broader market complex. December is traditionally a fairly strong month for the stock market. According to the Stock Traders Almanac DJIA averages 1.7% and S&P 500 gains 1.6% on average. This year though all markets are going to have to overcome the unknowns of another covid variant.
In the outside equities ISM’s PMI Manufacturing data showed that US manufacturing grew for the 18th consecutive month with a reading of 61.1%. That is up from 60.8% in October. The New Orders Index came in at 61.5%, up 1.7% compared to the October. Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM reported that “The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement. All segments of the manufacturing economy are impacted by record-long raw materials and capital equipment lead times, continued shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products. Coronavirus pandemic-related global issues — worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems — continue to limit manufacturing growth potential. However, panel sentiment remains strongly optimistic, with 10 positive growth comments for every cautious comment.”
Federal Reserve Chairman Jereome Powell also turned hawkish on inflation and monetary policy this week in front of the Senate. Powell noted that he was very concerned about continuing inflation and even mentioned it was time to retire the “It’s transitory” mantra. Powell is pushing for the US to stay the course of tapering bond buying and raising interest rates despite a new covid variant.
In the grain complex Tuesday and Wednesday both ushered in flash sales from USDA. Tuesday saw 132,000 MT of soybeans sold to unknown destinations and Wednesday saw 150,000 MT of corn sold to Colombia. However the window for US exports may be starting to dry up as February bids on soybeans in Brazil are 36cents cheaper than US bids.
Grains have been participating in the risk off mode of the broader market complex. There are still plenty of bullish supply possibilities for grains. Input prices like fertilizer continue to be near record highs and availability is still somewhat questionable going into the future. High protein milling wheat still seems to be in tight supply as well as Egypt’s GASC purchased one of it’s largest tenders this week at 600,000 MT from Russia and Ukraine. Australia is also still dealing with flooding that has greatly impacted their growing wheat crop.
According to EIA data the week ending November 26, US ethanol production dropped 43,000 barrels per day (b/d), to a seven-week low. Production was 6.3% above the same week last year, which was affected by the pandemic, but 2.4% less than the same week in 2019. US ethanol stocks increased by 0.7% to a 12-week high of 20.3 million barrels. However, stocks were 4.4% below the year-ago level and 1.6% lower than the same week in 2019. Inventories increased in the Midwest (PADD 2) and Gulf Coast (PADD 3) but thinned across the other regions.
In the livestock trade cattle started to trade higher on Wednesday. Albeit the live cattle spread is once again favoring differed contracts rather than the front month contracts. That likely shows speculative money is seeing an end to the strong run cattle have had recently.
Hogs seem to be on their own island and not wanting to do much either direction.
Cash cattle in the country are in a standoff as packers are bidding $138 and feeders are asking $143+.
The Fed Cattle Exchange Auction today listed a total of 1,868 head (TX 1,727 head, KS 141 head), none of which actually sold, as they did not meet the reserve prices, that ranged from $140 to $141. Opening prices ranged from $137.50 to $138, high bids ranged from $138 to $139.
For the week ending November 20, 2021, Imported Beef Passed for Entry in the U.S. totaled 49,558, 104.74% of the previous week and 106.21% of the 4-week average.
Daily Slaughter Estimates Wednesday
123,000 hd today Holiday hd wk ago 120,000 hd yr ago
480,000 hd today Holiday hd wk ago 491,000 hd yr ago
Wednesday midday carcass cutout
Choice up 1.28 271.50
Select up 0.61 258.58
C/S Spread 12.92
Carcass up 9.31 91.68
Bellies up 21.14 147.94
Daily Broker Commentary
Pre-opening grains with Mark Gold of Top Third Ag Marketing
Pre-opening livestock with Jerry Stowell of Country Futures
Midday market commentary with Mike Zuzolo of Global Commodity Analytics
Closing grain commentary with John Payne Daniels Ag Marketing
Closing market commentary with Jack Fenske with York Commodities