Market Watch with Austin Schroeder
November 24, 2023
Red Friday
The Friday after Thanksgiving is known around the US as “Black Friday.” Tradition has it that this is the day when retail stores traditionally go in the ‘black’ for the year, as the mass flock of shoppers helps to raise their bottom line to a profitable position. While that may or may not still be an accurate representation given online shopping, for the ag markets this particular Friday was anything but a ‘Black’ Friday. It should be known as Red Friday, as a quick look at my quote screen shows the only ag commodity with any green is cotton. Apparently, anyone with a bullish outlook on things took a 4-day work weekend, with the markets fading the early week gains and going in the red for the week.
Corn futures gave back gains from early in the week plus some on Friday, as December was down 3 ¾ cents on the week. Crop Progress data from Monday showed the US corn harvest at 93% complete as of 11/19, now 2% faster than the 5-year average pace as it begins to wrap up. EIA data from Wednesday showed a 24,000 barrel per day drop in ethanol production during the week that ended on 11/17 to 1.023 million bpd. Stocks were in building mode, mainly in the Gulf (an indicator of exports to come), as overall stocks rose 698,000 barrels to 21.652 million barrels. Friday morning’s Export Sales report showed bookings backing off from last week’s total to the third largest this MT at 1.432 MMT during the week ending on November 16. Export commitments are now 22.531 MMT, 27% larger than the same point last year. The low prices have been doing something! That is also 46% of the USDA forecast, which still lags the average pace of 49% for this time of year.
Wheat continues to be under pressure, as all three exchanges were down on the week. Chicago was down the least, as December was 2 cents lower. Kansas City futures were 16 cents, or 2.59% in the red since last Friday. Minneapolis dropped below $7 for the first time since May of 2021 to post a 2.62% loss on the week. Monday’s Crop Progress data indicated 95% of the US winter wheat crop planted as of 11/19, 1% back of the normal pace. The crop is now 87% emerged. Condition ratings were up 1% from last week at 48% gd/ex, or a 333 score (+2) on the Brugler500 index. Your weekly reminder that correlations between Fall ratings and final yield are very weak. Weekly Export Sales data showed the lowest weekly total since mid-July at just 171,753 MT of wheat was sold in the week that ended on November 16. Total export commitments are now at 12.113 MMT, which is 64% of the USDA full year export projection, compared to the 69% average pace. The slower sales are becoming an issue.
Soybeans faced some serious selling pressure on either side of the Thanksgiving holiday to fade off Monday/Tuesday strength. January was down 9 ½ cents since last Friday, losing 58 cents off the intraweek high. December Meal posted a gain of just $4.10 for the week, with January down $2.40. Bean oil was 48 points lower this week, mainly on a Friday collapse. This week’s Export Sales report showed bookings backing off from last week’s record total to only 961,270 MT during the week that ended on November 16. That was a 7-week low for the weekly sales and included 757,413 MT to China. That pushed the total of shipped and unshipped sales to 29.055 MMT, now down 20% from last year. That is 61% of USDA’s forecast total and now just 4% behind the 5-year average pace at 65%.
Live cattle straight up collapsed on Friday to carry the week’s losses to $5.50, taking contracts to new lows for the move. Cash trade was softer again this week, as cattle exchanged hands across the country at $177, down $1. Feeders were under pressure as well on Friday with January down $9.175 on the week. The CME Feeder Cattle Index was down $3.52 this week to $225.24. Wholesale boxed beef prices were mixed again this week. Choice boxes were back up $4.16 (1.4%) to $298.03, while Select was $1.94 lower (-0.7%) to $268.76. Weekly beef production was down 15.4% vs. last week, due to the Holiday and 9.5% lower vs. last year. Year to date production now trails last year by 5.4%, as slaughter remains 4.7% behind 2022’s pace. Beef stocks on October 31 were tallied at 444.33 million lbs according to Wednesday’s Cold Storage data report. That was a 12.92% drop from a year ago and the tightest since 2014. Compared to September it was a seasonal jump of 4.58%. The Friday edition of the weekly Export Sales report showed just 9,988 MT of beef sold in the week that ended on 11/16, back up vs. last week. Shipments were at a 6-week high of 15,096 MT.
Hogs got some late week pressure again, with December tacking on a $3.40 loss since last Friday. The CME Lean Hog Index slipped $1.78 lower this week to $73.90. USDA’s Pork Carcass Cutout was down $3.99 (-4.5%) this week to $84.17. The picnic (-14.8%), ham (-2.6%) and belly (-12%) were the drivers of that with the other three cuts slightly higher. Weekly pork production was 15.8% lower vs. the week prior thanks to the Thursday holiday and 0.4% below than last year. YTD Slaughter has been 1.5% higher, with actual pork production up just 0.4% yr/yr. Cold Storage data from Wednesday showed 435.94 million lbs of pork stocks at the end of October, down 5.57% from September. That was a 14.47% drop from last year and the lowest October total since 2004. Pork export sales totaled 26,330 MT in the week that ended on November 16, back up from last week’s 5-week low. Export shipments were tallied at 32,184 MT, the second largest shipment total since August.
Cotton slipped lower this week, as March was 52 points lower since last Friday. The Monday Crop Progress data showed 77% of the cotton crop harvested as of last Sunday, 6% above the average pace, as this year has run mostly uninterrupted. Wednesday’s Cotton Ginnings report showed 5.787 million RB have been ginned in the US as of November 15. That was an addition of 2.13 million RB from the previous report and is the lowest mid-November total since the 15/16 crop year. Friday’s Export Sales report showed bookings backing off slightly from last week’s total to 322,212 RB in the week of 11/16, with another large chunk to China. Shipments were back down to the lowest since Nov 2021 at 77,869 RB. Cotton export sales commitments for 23/24 are now 7.584 million RB after the last few weeks of solid sales, which is 66% of USDA’s forecast and trailing the 70% average pace for this point in the MY. The FSA raised the Average World Price for cotton by a penny on Thursday, to 65.23 cents/lb.
Market Watch
The trade will spend the Monday morning session reacting to any moves they missed over the thin Friday session, and to any surprise futures positions due to December options exercises. Export Inspections data will be published on Monday morning, with the final NASS Crop Progress report for the year out that afternoon. EIA will released their weekly production and stocks report for ethanol on Wednesday, per normal. The weekly Export Sales data will be back to a Thursday morning release next. Thursday is also First Notice Day for December grain futures, as well as the last trade day for November feeder cattle futures and option. As the calendar switches to December on Friday, it is the last trade day for December live cattle options. We will also receive the monthly USDA Grain Crushings, Fats & Oils, and Cotton Systems reports on Friday.
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