Grain futures ended mostly lower on Monday with livestock mostly higher.
Corn Makes Fresh Lows
Dec corn futures closed 2 1/4 cents lower on Monday at $4.39 1/2 and scored a new low close for the move.
Corn futures saw more technical selling pressure, despite funds already being short in the corn market.
Report Positioning
Mike Minor of Professional Ag Marketing says corn was positioning ahead of the November WASDE with fears of higher yield. The average trade guess is 180.3 bushels per acre, down .9 bushels per acre from October. He says the range of estimates is around 10 bushels per acre, from 173 to StoneX’s 183. So, he thinks the market is trading a higher number.
Minor says as the harvest has progressed, yield reports have been higher than anticipated for both corn and soybeans.
“I think they’ve got some pretty big numbers built in. I’ll be surprised if the trade today at these current price levels aren’t trading something close to a 182 or higher on corn, kind of around that 12% stocks to use ratio,
I would figure, with where price is at,” he says.
For soybean, Minor says the market is trading above the 53.5 bushel per acre pre-report estimate.
“I’d say we’re probably trading something closer to a 54 today,” he adds.
However, he says with the higher yield he thinks USDA could raise soybean exports as an offset.
Funds Already Short Corn
Even if the market gets a bearish number on corn yield the funds are already short. So how much shorter do they want to push?
He says, “The last couple go-rounds, we kind of stopped around 60,000 contracts short and then 80,000 contracts short on a few of the last pullbacks. Word on the street from what we’ve heard is the funds were long for inflation reasons.”
Funds were buying corn, soybeans and wheat with the tighter balance sheets and potential problems globally and in the U.S. However, the inflation concerns are starting to fade away now with crude oil pulling back as well, and the balance sheets growing for the United States on corn and soybeans and wheat.
“It seems like they have no real reason to be long those anymore. So they’ve got rid of them all, but they have no intentions, the funds have told us, of trying to go and build a big net short position. So I would
assume we should be somewhere close to where they probably try to phase out and say this is probably enough for now.”
South American Weather Premium
Funds are still long in the soybean complex and Minor thinks they are holding that long on concerns about how El Nino could impact the South American crop.
“If this super El Nino turns to a real hot, dry weather pattern in South America, that might be a problem. So they’ve held together a little bit longer of a position on soybeans than like corn or wheat. And with that being
the case, Michelle, I feel like that price held up for a while and now they’re starting to get rid of it. The ratio between soybeans to corn is pretty favorable to soybeans still. So we’ll see if they keep pecking away at that. Is corn going to go up to a price to make it more competitive or is soybeans going to come down? That’ll be the question here through the winter.”
Right now the soybean planting pace in Brazil is at 64% according to Ag Rural which is ahead of the five year average. The weather also looked more favorable on Monday for areas of the north, so that may have also weighed on futures.
“So typically they’d start their harvest in January, February and start exporting out. So December is typically the time frame you’ll really start to look like, okay, do they have a problem or not,” he adds.
Black Sea Peace Talks
The wheat and corn markets are also seeing some caution ahead of tri-lateral meetings between the U.S., Ukraine and Russia to get a cease fire or grain export corridor.
The markets have little if any war premium after wheat has corrected $2 off the highs in September but funds continue to push the market lower and go shorter in their net position.
“I mean, this wheat market is taking off multiple dollars and it’s just been difficult. This market keeps breaking support. Like December, Chicago wheat’s tried to hold at six bucks and it’s really struggled too. So I have a hard time believing that there’s much more down pressure here that they can really pile on that wheat market,” he states.
Money Flow Impacts Grain Markets
The grain markets are also been impacted by money flow tied to the outside markets.
Crude oil was down over $13 last week and while the grain have become decoupled from those moves it has influenced fund liquidation with the idea that lower energy prices will mean lower inflation. The funds that had bought corn and bean oil on inflationary concerns have been liquidating those positions, especially since the October WASDE.
He says, “When I look at crude oil’s impact on the overall marketplace, it still controls mostly everything. And you’ve seen a big pullback in crude oil, most likely because of one, the Iran situation easing a little bit, and then the blue wave that came through as well.”
So if crude oil prices continue to erode Minor says it will impact money flow.
“If you’re not worried about inflation anymore, you’re probably not going to be buying corn and soybeans to hedge against inflation is one thing. And then two, the money flow that’ll go back into like the equity markets, is pretty substantial. And I think today’s trade really showed that too.” he adds.
Cattle Rally With Stock Market and Tyson News
Live and feeder cattle futures had a nice rally to start the week. Some of it was technical buying as the market got overdone to the down side. However, the big rally in the stock market also had an impact.
Minor says there was also a delay to the labor strike at west coast ports including Los Angeles and Long Beach. “They were looking at Nov. 6 and that strike got delayed until the 20th. Those two ports are very substantial. They make up about a quarter of the waterborne exports for red meat out of the United States.
So that’s very important that we don’t get backed up at all with meat in the United States.”
The other story was Tyson Foods announced Monday it intends to establish a new long-term partnership with Allied Beef Company (Allied Beef), a consortium of American ranchers, designed to strengthen the domestic cattle supply chain and support the future of Tyson Foods’ beef production. The collaboration would create a direct partnership between Tyson Foods and American ranchers, creating a more economically sustainable model across the supply chain while supporting rancher opportunities and long-term growth.
In anticipation of the partnership, Tyson Foods is moving forward with plans to fully reopen the second production shift at its Amarillo, Texas, beef facility. The company has already begun restoring select second-shift operations and expects the shift to be fully operational by summer 2027.
Minor doesn’t think it gives back much leverage to producers but it did get the market excited.
Cattle Cattle Build on the Rally?
So can cattle futures build on this rally especially with the prospects of lower cash again this week?
Minor says he thinks its limited. “We were overdone retracement-wise. I think we fought back to about that 38% in the feeders today, just single-handedly. So a good resistance point there. We’re right at a few key moving averages as well. I think that’ll be difficult to break through. I’ll need something more concrete, I think, for fundamentals to really try to build off. But at this point, I don’t see much change. And I think it was just a bounce, but we’ll see.”
Nearby Hogs Bounce
Nearby hog futures also bounced with cattle on the news of the west coast port strike being delayed but Minor says the bounce was only short covering not necessarily a bottom being formed.
He explains, “The last couple of decades, the lowest hogs close we’ve had for December was around $54.95, I believe. So you traded below that today again. You were in the $53s area. So, I mean, the hogs are definitely a bargain buy opportunity. We’re seeing that on export activity as well lately. So when I look at this hog
market, yeah, we’re hopefully low enough where low prices are starting to cure low prices.”
However, he doesn’t think a real turnaround is in the cards.
