Corn and soybeans ended higher Monday. Live cattle were higher with feeder cattle and lean hogs mixed.
Soybeans Extend Rally on Easing China Tensions
Jeff Hoogendoorn, Professional Ag Marketing, says soybeans ended higher on Monday and extended gains after a higher weekly close last week.
The market got a boost from easing trade tensions between the U.S. and China and President Trump’s comments Sunday that he’s going to meet with Chinese President Xi in two weeks and hopes to push for Beijing to purchase the same amount of soybeans they did last year.
Argentina Soybean Purchases?
However, Hoogendoorn says there is talk in the market that Argentina may buy some soybeans from the U.S. in exchange for the U.S. buying their beef and in light of the $20 billion bailout the U.S. already provided.
He says after selling soybeans to Argentina the country may need to buy some soybeans for its processing sector which is the top producer of soybean meal in the world.
Higher Soy Processor Bids
The soybean market has also got a boost from improved basis levels and soybean bids around processing plants.
In Illinois, farmers have report that ADM is offering free DP for soybeans delivered through the end of the month.
Meanwhile, other processors may have been caught short of inventory as farmers put soybeans into storage this fall verses selling off the combine as basis was horrible in at least the Northwest Corn Belt states due to the lack of export sales to China.
Soybeans Close Above Resistance
Soybeans also got a push from strong weekly export inspections at 54.2 milion bu. and all combined the market got above various moving averages on the November contract with a close above $10.30.
Corn Up a Fifth Day
Corn futures were higher for a fifth day with Hoogendoorn says is impressive in the middle of harvest.
He chalks it up to the rally in soybeans spilling over to support corn but additionally the continued lower than expected yield results out of Iowa, Illinois, Indiana and Ohio.
Demand has been strong for corn as well with export inspections at 51.9 million bu. on Monday, bringing the total to 368 million bu., up 61% from last year.
“With no soybeans going to China there are increased loadings and movement of corn through especially the Pacific Northwest,” he adds.
Live Cattle Recover with Higher Cash
Live cattle futures recovered after the melt down on Friday as higher cash trade lifted the market.
Hoogendoorn says the market was digesting the news of higher cash that was lost in the emotional trading session on Friday.
Cash developed at mostly $240 live in both the North and South on Friday which was up $5 from the previous week. Dressed prices at $372 in the North were up $9.
Trump Touts Argentina Beef Purchases in Plan to Lower Prices
President Trump’s comments about the administration offering a plan to lower beef prices for consumers melted down the futures on Friday and the market did try to recover on Monday.
Trump says they are considering buying Argentina beef to curb beef inflation in the U.S. but it would not be a game changer.
Data from last year and the first part of this year indicated they account for about 2 .1 % of U.S. imports.
Cattle Market Fears Other Options to Lower Beef Prices
The cattle market is more fearful of the U.S. reopening the border to Mexican feeder cattle imports or lowering the 50% tariffs on Brazilian beef imports according to Hoogendoorn.
So the fact Trump did not announce either of those two interventions as part of his plan was a relief to the markets.
However, Hoogendoorn thinks the government intervention may be the tipping point for the cattle market.
“I think there are fund traders with millions of dollar of long cattle positions that are likely to bank their profits and find another market to trade as they don’t want to fight against the U.S. government,” he adds.
Lean Hogs End Mixed Looking for a Bottom
Lean hog futures ended mostly higher Monday with the nearby contracts seeing pressure and spot month December touching two month lows early in the session but holding $82.00 support.
The funds have continued to liquidate long positions under the pressure of lower cash.
Hoogendoorn thinks the market is trying to carve out a bottom in part due to the discount the futures are holding to the cash index.
