Grain and hog futures end lower on Monday, with hogs higher
Soybeans Make New Lows For The Move
Soybeans were lower on Monday making new lows for the move but at least ending off the lows as support held. Don Roose with U.S. Commodities says the soybeans have been suffering from a lack of bullish news and China fatigue. China was in for another 5.0 million bu. of U.S. soybeans on a flash sale but Roose says it’s just not enough to excite the bulls. He estimates China has bought about 260 million of the 440 million bu. purchase commitments.
Soybean Exports Still Trailing
The problem is even with the China business, soybean exports are trailing last year by over 400 million bu. and that will be difficult to make up, even with buying from other Asian counties he says. Plus, Brazil’s soybean crop will start to compete with U.S. soybeans shortly after the first of the new year. “We’re going into the harvest for Brazil here very soon. Let’s just say we’re a month out and then we get into the main harvest in that April or March time frame. So we’re going to have to make up a lot of ground, and it’s going to have to be in the summer months, Michelle. So is that possible? That’s the big question mark. And it looks very suspect.”
NOPA Crush Below Estimates
The NOPA crush report for November came in at 216.03 million bu. which was a record for the month and up nearly 12% from last year. However, it was below estimates and the soybean oil stocks were above the trade guess at 1.513 billion pounds, which is up 40% from a year ago. That combined with Friday’s news EPA is likely delaying the Renewable Fuels Standard blending mandates or Renewable Volume Obligations for 2026 and 2027, also pressured soybeans and bean oil.
Funds Liquidating in Soybeans?
Roose says the delayed Commitment of Traders report shows the funds were long nearly 230,000 contract in soybeans, which is close to the record of 260,000. This is also longer than most in the trade expected so funds could still be liquidating in the market. “I think that the funds have kind of balanced back here, really. And I think that when you get into this oversold condition where you’re at right now, you’ve got to be a little careful because you’re kind of a, you know, kicking the dog down here, if you will,” he says.
Soybeans Fill Chart Gaps
Roose says the soybean market technically filled the Oct. 24 chart gap areas in some of the contracts, including March and then seemed to bounce off the lows. However, whether or not these areas of support will hold is still in question says Roose. “We pushed down to trying to hit some of these chart gap targets, Michelle. We got very close to those. So we’ll see if we fill those here soon and then we see if we stabilize,” he explains.
Corn Lower Following Wheat
Corn futures ended lower also with soybeans but even more so following wheat which also made new lows for the move. Roose says the corn market is still trading sideways and is in Holiday mode and rallies are capped by wheat. “The bottom line is, this wheat market, just too much wheat in the world market. That showed up in the government report last week. So that’s a big anchor on the corn market. We’re seeing more wheat going into the feed. That’s an anchor on the corn,” he adds.
Wheat Weighed on By Global Supplies
Wheat futures also made new lows for the move on technical selling and the continued hangover of large global supplies confirmed in the December WASDE. Roose says, “Argentina, Australia, both of those crops look like they could be records coming out of the field. So, with too much wheat in the world no one needs to chase supplies with higher prices.” However, he still thinks the market is getting close to support areas that will hold. “I doubt if there’s a real reason for the wheat market to be much under $5.00, you know, so let’s just call it $5.00 to $5.25 probably is a good support. And that’s why week after week, we really don’t go anywhere. We’re just kind of stuck in this range. We take off to the upside and we stall and we come back down. I think the funds are short. They’re getting less short.”
Cattle Higher Eyeing 62% Retracements
Cattle futures traded both sides on Monday but managed to close higher in the end. The market was overbought and due for a correction which the futures saw on Friday. Roose says the rally now has February live cattle setting just under the 62% retracement level on the charts.
Another Week of Higher Cash Cattle Trade?
The live and feeder cattle futures were pushed by sharply higher cash last week. The average was $228.19, up $6.98 from the previous week. However, Roose thinks this week’s fed cash trade will be steady at best. Packers bought large numbers of negotiated cattle last week but will now be purchasing for two short holiday kill weeks and may not need as much inventory. Plus, with higher cash and lower boxed beef prices packer margins are in the red. .” think when you look at it, box beef is stalled. I think the other thing is the packer is losing money now, $130 bucks, $140 bucks a head.”
Lean Hogs Correct
Lean hog futures saw some routine profit taking according to Roose as the futures got too far ahead of the cash index. However, he admits the market may have had a mild reaction to the news Mexico was initiating a anti-dumping case against U.S. pork.
