The final week of September and the 3rd quarter had dawned and actually the market is feeling optimistic. From last week’s doom and gloom, Monday’s tune has changed to the bright side. Congress is working on getting back to fiscal stimulus talks, economic data is still looking decent in the US and some states are opening back almost to pre-covid levels. Now there is still the looming European lockdowns, a hostile federal government worrying about Supreme Court Nominee’s and possible negative economic data to come.
The Dallas Fed manufacturing survey produced a general activity index of 13.6 for September, up from 8.0 in July and up from the average analyst estimate of 8.5. The region’s production index rose to 22.3 for September, up from 13.1 in July. The Dallas Fed’s report indicates that factory activity within Texas expanded for the fourth consecutive month following a record contraction earlier in the year due to the Covid-19 pandemic.
The grain market split into camps on Monday. The bulls went with corn and wheat. While the bears went with soybeans. Wheat was able to benefit from a slide in the US dollar on Monday. Meanwhile the Russian Ruble rallied to start the week moving towards multi month highs against the dollar. Wheat inspected for export by USDA was also strong at 563,000 MT up 60,000 MT from last week. Year to date wheat exports are about 700,000 MT ahead of 2019. Dry weather conditions also look to persist across the hard red winter wheat belt in the US. Corn was helped higher by wheat, but corn traders will be hesitant to build to much of a long position ahead of Wednesday’s quarterly stocks report. Arlan Suderman, Stone X, made mention in his commodity commentary that the third quarter stocks report has been known to hold surprises. As for soybeans after several weeks of a strong run up the sellers have finally moved into the market. Likely the selling is a combination of managed money lightening their long position which has neared record numbers. China is also going into their Golden Week Holiday starting Thursday and will likely be out of the market for the next week to two weeks.
USDA export sales started strong this week with unknown purchasing 207,140 MT of corn and 218,300 MT of soybeans. Japan purchased 110,800 MT of corn on Monday.
In the livestock following a bearish cattle on feed report cattle were actually able to move mostly higher. A higher stock market probably assisted live cattle futures and that could have helped stabilize the feeder cattle complex. Strong cash for both feeders and fed cattle also helped to support the bulls. Last week’s livestock auction summary for Nebraska noted that the fall run of calves has started and yearling cattle are becoming scarce. The report also noted that being dry and dusty pre-conditioning will likely bring a premium this fall.
As for the lean hogs they ended mixed on Monday. The midday carcass cutout was strong though with the carcass in spitting distance of $100. That should support cash which in turn should support futures.
In the country on on Friday there were scattered bids, but it appeared that the majority of business had concluded for the week. Cash developed different this week than what it has over the past couple of months. Feeders held until Thursday when cash finally developed at $105 live $165 dressed. Both $2 higher than last week’s weighted averages.
For the week ending September 19, 2020, Imported Beef Passed for Entry in the U.S. totaled 43,255, 118.87% of the previous week and 101.14% of the 4-week average.
Expected Slaughter numbers Monday
120,000 hd today 119,000 hd wk ago 116,060 hd yr ago
483,000 hd today 481,000 hd wk ago 485,045 hd yr ago
Midday Carcass Value Monday
Choice dn 1.67 217.67
Select dn 0.58 206.40
C/S Spread 11.27
Carcass up 5.72 97.04
Bellies up 21.12 171.28
- Corn unch up 2 1/2
- Soybeans dn 1 3/4 – 6 1/4
- Chicago Wht up 5 1/2 – 6 1/2
- Kansas City Wht up 6 3/4 – 7 1/2
- Live Cattle dn 0.45 up 0.60
- Feeder Cattle dn 0.25 up 0.95
- Lean Hogs dn 0.77 up 0.95
- Class III Milk dn 0.02 – 0.17
Pre-Opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Unknown destinations were back in the market for soybean meal. Audio unavailable 9-28
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Quarterly hogs and pigs report may prove bearish for the lean hog market . Audio unavailable 9-28
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. The broader market is seeing increased volatility as the US gets closer to election day.
John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Soybeans finally hit the sellers wall, but it could just be harvest pressure.
Jack Fenske, York Commodities, looks at the closing market numbers. Grains could have put highs in, but Fenske says seasonally grains put highs in next week.