Afternoon Grain and Cattle Recap

Grain – Kelley Fornoff

It was a rather uneventful day in grains with corn and soybeans both failing into the close. The corn market found support throughout the day after rumors circulated that China was considering buying “at least” 3 MMT of US corn as soon as January. The last time China bought more than 3 MMT of corn from the US was in 2013. If China is going to meet its projections in this year’s ethanol mandate, China’s corn imports could reach a four-year high in 2019. March corn made a high of 387’4 but the rumor wasn’t enough to hold strength into the close and March corn closed 0’4 higher at 384’6. It seems we have lost momentum for now unless something incredibly bullish happens over the weekend.

Soybeans also seem to be in holiday mode already with little new buying action from China. In order to keep the soybean premiums from jumping a considerable amount, China isn’t going to purchase all of its promised soybeans at once so it shouldn’t be a surprise that we’re seeing intermittent purchases. We’re still expected to hear an announcement on the government’s second half soybean payment this month but the government is likely still waiting on a potential deal with China and/or for soybean prices to increase to make a final decision. In other words, it may be a while yet. January soybeans closed 6’4 lower at 900’4. Support is near 895’0 with resistance around 915’0.

Wheat took a bit of a break today on a lack of any new bullish news. The Russian Ag Ministry is planning to meet with its exporters next week to possibly curb exports which has driven the wheat market higher this week. March Chicago wheat pushed up to 538’0 which is above last week’s high before falling back to close 6’0 lower at 530’0. Resistance is at 545’0 and there is still a chance we could push back into that range. Support is at 528’0.

Cattle – Patrick McRae 

Cattle markets closed slightly negative on the day.  $119 cash will likely be the final trade for the week.  Board prices were hoping for some $120 but the lack there of will likely cause for a little set back especially with the contracts up near contract highs.  I would expect buying interest to resume at some point in an attempt at flushing out stops above April contract highs,  if we can get confirmation of a close above 125 in April it projects a move up to $130 on the board.  My opinion is that we will see eventual higher trade in the weeks and months to come.  Placements should start being the major focus and on feed numbers should spur some bullish fundamental projections.  Technical’s are overbought but the trend higher is still strong.  With all of that being said I am still buying put options in February and April live cattle contracts.  I am bullish and it is for that reason I am relying on the puts.  I recommend having put options on all of your Feb – April live cattle marketing’s and for those buying at margin with June marketing’s put options again are where I lean.  I do not recommend selling a call option in this market not until we see a break out higher or an increase in volatility.  Weather forecasts are getting warmer and if we can see further improvement we might get the January feeder cattle to pop up a little higher.  For those who are still sitting on Dec cattle hedges at $118 I recommend locking in this week’s cash price and offsetting those hedges come Monday.  December live cattle closed at $119.575 on the day and January feeder cattle closed at $147.575 down 0.400 on the day.