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3yrs ago Managed Futures blog.pricegroup Views: 650

NOV BEANS

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What a tumultuous week for the row crops! First the USDA, notorious for issuing bearish reports, came out with a bullish shocker – reporting Qtly Stocks underneath the estimated ranges! Next, President Trump tests positive for Covid-19 – delivering a big knee-jerk down to all the mkts! But when all the smoke cleared, Nov Beans were close to their highs!  Apparently, the massive Chinese buying is slowly whittling down our stocks! Not that we’re running out, but we certainly don’t have near as much as we thought 4-5 months ago!  This puts pressure on the next big supply – South America – which early- in-planting is very dry beans are 38% in here – China will outlast harvest pressure – stocks will be on 4-5 year lows!

DEC CORN

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Corn harvest is 25% done and with open weather ahead, should be ½ done by next week! The mkt anxiously awaits the Oct WADSE Report this Friday at 11am – should yields come in at 177 bu/a, then carryout would dip under 2.00 BB!  All the macros were supportive today with the DJI up 450, crude up $2.50 & the US $$ down 45 points!  Conventional wisdom states that harvest lows are generally carved out when harvest is 50% complete!  Going forward, the dryness in South America as planting is beginning must be closely monitored – El Nina could come into play – and China exports will be critical – as they rebuild their stocks cut by severe flooding & needed for the rebuilding of their hog herds! Finally corn is historically cheap – still in the “threes” – in the lower 10% of a 10 year range!

DEC WHEAT

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Dec wht has been primarily driven by one main fundamental – extreme dryness in the Russian wht areas – which may force them to enact export quotas – which would favor the US!  Also the dryness in our plains is a concern for our recently planted Winter Wheat crop the mkt still has to deal with record global stocks but an easing US Dollar should help!

DEC CATTLE

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The technicals look suspect – being range-bound since early July – after a stellar $22 up-move (90-112)! However, the fundamentals seem to support the mkt action – with possibly too much beef to absorb without lower prices!  Last weeks production was 5.7% over last year – the cut-out dropped $1.90 – its lowest since 9/23 – average weights & slaughter are up – 4th qtr restaurant demand may disappoint & the last COF reflected placements 9% over last year! So the mkt may need to decline to absorb the excess production!

DEC HOGS

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Dec Hogs gapped higher this morning off very positive fundamentals – suggesting the $17 rally (50-67) starting in late July might well extend! The surging pork cut-out reflects solid demand & the incredible $14 discount (avg -$2) that the contract holds to cash – means even a slumping cash mkt won’t impact this “bull mkt”! And hog’s strength is stand-alone as the cattle mkt languishes in a tight range! Much like the row crops, hogs have been a major beneficiary of massive China buying!

 

 


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