Top Farmer Closing Commentary 10-26-20

CORN HIGHLIGHTS: Corn futures Closed with small losses of 1 to 2 cents. Nearby December finished down 1-1/2 cents at 4.17-3/4. Coming into today, futures has closed higher seven of the last eight sessions. Today’s small setback suggest the market is consolidating but by no means seems to be losing upward momentum. Harvest delays due to rain and snow are supporting prices some yet farmers will likely resume harvest in a big way by week’s end. Expectations are that near 73% of the crop is harvested which would be well above the five-year average of 57%. Coming into today funds were estimated long 258 thousand contracts. By many accounts, the market is considered overbought. Yet the bigger picture perspective is likely trading on expectations for steady to lower carry out figures, and as we have often said, the trend of price will be the opposite of the trend of carry out. Just two months ago carryout was near 2.8 billion and now under 2.2 billion. Some are suggesting additional export activity and a slight reduction to yield could eventually mean carry out closer to 1.8 billion. Export inspections at 25 million bushels was not supportive.

SOYBEAN HIGHLIGHTS: November soybeans Closed mixed with bull spreading a primary feature in today’s trade. November closed 4 cents higher at 10.87-3/4 while July lost 1-1/4 closing at 10.58-1/2. Export inspections were outstanding at 97.9 million bushels. A sale was also announced this morning to unknown destination providing underlying support. Better weather conditions in South America may cap upside potential yet for now the market is paying more attention to export activity and the potential for additional sales due to the late planting in Brazil. Argentina also remains dry and as a crusher of soybeans, this could mean more demand for both soy meal and soy oil out of the US. If behind on sales, get current with recommendations or at least run target points underneath the futures markets, called stops, to trigger sales. The idea is that you won’t be selling necessarily on an up day but if prices are beginning a decline, you’re selling in the very upper range. 83% of the crop is harvested versus a five-year average of 73%.

WHEAT HIGHLIGHTS: Dec Chi futures down 12 ¾ cents, closing at 6.20, and March down 11 ½ cents, closing at 6.19. Dec KC wheat down 17 ¾ cents, closing at 5.52 and March down 17 cents, closing at 5.59 1/2. If ever one needed proof that weather is true driver of prices right now, today is proof in the pudding. U.S. weather maps show snow, ice, and rain across the U.S. Southern Plains with more precipitation expected in the next 2 days. More importantly, today’s forecast also showed increased chances for moderate-heavy rain in Ukraine and southern Russia, first time Russia has been given hope of helpful rains in over 2 months. As we reported last week, these rains do not eliminate drought concerns for us in the U.S. or Russia, but it provides a break and will likely retrace temporarily until weather returns to a more dry forecast, which is currently expected for next week. Export inspections this morning came in at 13.4 mb of wheat, indicating the wheat rally has shied away buyers for now. Crop progress report reported winter wheat at 85% planted – 62% emerged. The crop is rated 41% good to excellent compared to last year’s 56%.

CATTLE HIGHLIGHTS: Live cattle markets were trading on both sides of the trading range before ending mixed to higher on the day. October cattle up 0.625 to 103.975, and December cattle finished 0.175 lower to 103.400. the strength in the market was in the deferred contract as summer months posted some triple digit gains. The market shook of Friday’s cattle on feed, by hold recent lows in Monday’s trade. The report on Friday came in heavy with total cattle on feed at 103.8% of last year, a record total of cattle. Placements were elevated in September, but with poor pasture conditions in the southern plains, cattle moved more quickly into the lots. Within the numbers, the backlog of larger heavy weight cattle backed up from CIVD slowdowns seems to be worked trough the market. Feedlots are more current with the 120+ cattle at -2.9% of last year. Now with a clearer picture of the cattle supply, demand concerns will be the focus of the market. retail values still trended lower on the past couple weeks, and that trend needs to change to bring value into the market near-term. Weakness stayed to start the week with choice carcasses closing at 206.54, down .95 and select carcasses were 2.59 softer to 188.81. Cash trade was quiet today, the market will be watching the development of early bids. Feeder markets posted bullish reversal during Monday trade, as the market is trying to build a bottom. October feeders gained .175 to 133.700, and November feeders were .925 higher to 130.575. One day does not make a bottom, the key will be follow through the next few days.

LEAN HOG HIGHLIGHTS: The lean hog market saw additional recovery on Monday as December hogs were 0.725 higher to 67.750, and February hogs were 0.725 higher to 67.650. Early in the session, hog futures tested previous lows, but turned nicely higher, and posted technical reversals in Monday’s trade. The tighter pork supplies from last week’s cold storage report reflective of the strong demand for US pork on the export front and for the retail consumer. This strength of demand, has shown in the retail prices for hog carcasses. Today, midday carcass values were higher, up 2.99 to 96.24. The strength in retails was seen with a 12.00 jump in the ham retail cut. The lean hog index softened .06 to 78.54. The index is still holding a premium to the December contract, which is adding some buying support to the December contract. Projected slaughter today is an estimate 492,000 head, steady with last year levels. The key in the hog market will be the demand. Supplies are comfortable in terms of slaughter hogs available, so the product demand will maintain the strength in the market after this short correction.

Market Commentary provided by:

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