The week starts on an ominous note it’s the 33rd anniversary of Black Monday when the Dow Jones lost 22% of it’s value in a single day. While the outside equities are not selling off to those proportions there is an uneasiness in the market. The US Presidential election is now just around the corner and it appears that another round of stimulus ahead of the election is out of reach. Friday stocks got a boost from the US Treasury and Democrats coming to a possible agreement on another round of stimulus. Monday though it appears that it was more rumor than fact. The stock market is also being hit with a wave of 3rd quarter earnings report from multiple companies.
In grains Monday is bringing a mixed opening to the week. Wheat is hitting technical resistance to the topside, but currency and supply fundamentals could lend support to top that resistance soon. The currency comes as the US Dollar index is down 0.45% Monday morning. That compounds with the near 2% drop the dollar has seen in the last 30 days. Meanwhile the Russian Ruble is up 0.35% on Monday and up 3.35% from it’s September low. Speaking of Russia analysts are suspecting that up to 10% of Russian winter wheat acres could be killed out due to drought ahead of the freezing winter. It’s expected that those acres will be shifted to spring wheat. On the subject of moisture rain is finally starting to fall in South America. Mato Grasso in Brazil is still several inches behind in their typical rainfall, but soybean planting is expected to start increasing. Going into Monday only 8% of the short season soybeans were planted. That’s about 7% behind the 5 year average for the area. As for corn it looks like it may be up to Chinese demand. According to Stone X the Chinese Ministry of Ag released data that they expect the current year’s corn crop to reach 265 million metric tons, or 10.4 billion bushels, despite notable damage from flooding, drought and late-season typhoons. That is an increase of 4 mmt from the previous year’s crop. The Ministry also expects domestic corn consumption to increase 13 mmt this year. That will exceed domestic production by 28 mmt. That continues to fuel rumors on the ground in China that the country could import as many as 20 mmt or more in the coming year. So far, the government has left its tariff rate quotas at 7.2 mmt. Farmers are bullish, and they are refusing to sell as they harvest their 2020 crop. End users are worried. Cash prices in southern China are pennies away from $10 per bushel.
USDA’s export sale terminal fired up on Monday announcing two flash sales. The first 345,000 MT of corn sold to unknown and the second 123,000 MT of corn sold to Mexico.
In livestock the shoe has finally dropped and cattle futures are seeing momentum drive prices lower. For a couple months cattle have battled technical overbought signals. Up to this point bulls have been able to fight off the bears, but it appears that may be different this time. Last week live cattle futures went through critical levels of support at 20,50 and 100 day moving averages. The drop in futures was also noted in cash for fed and feeder cattle.
Lean hogs continue to trade mixed with the front month contracts now catching up to the cash market. Deferred contracts though continue to encounter resistance on concerns the current strong demand won’t last with pork being plentiful.
The majority of business took place on Wednesday and Thursday last week. Southern live deals ranged from $106 to $109, mostly $108, roughly $0.50 lower than the weighted averages of the week before. Northern dressed trade had a range of $165 to $170, mostly $169, about $1 lower than the prior week’s weighted average basis Nebraska.
For the week ending October 10, 2020, Imported Beef Passed for Entry in the U.S. totaled 37,136, 87.18% of the previous week and 90.73% of the 4-week average.
Expected Slaughter numbers Monday
119,000 hd today 118,000 hd wk ago 117,414 hd yr ago
486,000 hd today 485,000 hd wk ago 490,237 hd yr ago
Midday Carcass Value Monday
Choice dn 0.17 209.86
Select dn 1.05 192.47
C/S Spread 17.39
Carcass up 1.06 100.25
Bellies up 7.84 181.49
- Corn up 1 1/2 – 3 1/2
- Soybeans up 1 1/4 – 4 1/4
- Chicago Wht up 1 1/4 – 3 1/2
- Kansas City Wht up 3 1/4 – 4 1/4
- Live Cattle dn 2.02 – 3.47
- Feeder Cattle dn 2.90 – 4.95
- Lean Hogs dn 1.45 up 1.62
- Class III Milk up 0.03 – 0.75
Pre-Opening Market Broker Commentary
Ed Dugan, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Grain export sales were hit and miss in comparison to the estimates. No 10-19 commentary available
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Lean hogs could continue higher with a strong pork carcass cutout. No 10-19 commentary available
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Currency and fund action are keeping grains in the green at the midday on Monday.
John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Grains continue higher, but may need more currency action to start another leg.
Jack Fenske, York Commodities, looks at the closing market numbers. Fenske see’s the current market as demand driven with little to change it from moving higher.