Grain – Kelley Fornoff
Corn and soybeans both failed into the close today as there was really nothing new to end the week. Corn traded higher throughout the day after a rumor circulated that China was looking to purchase up to 3 MMT of corn starting in January. The last time China bought this much corn from the US was in 2013. In order for China to keep up with its ethanol mandate from earlier this year, 2019 could potentially be the year where China purchases more corn than in the past four years. 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. For now it seems like the momentum has been exhausted and unless something incredibly bullish happens over the weekend, we may be in for a bit of a pull back.
Soybeans also had a fairly uneventful day and seem to be wanting more export sales than China is willing to buy just yet. It shouldn’t be surprising that China is intermittently purchasing soybeans in order to try to keep the premium from increasing substantially but the market still wants more. We are supposed to be hearing a decision on the second half of the government soybean payment sometime this month but it seems like the government is waiting on either a deal with China and/or soybean prices to increase. In other words, it may still be a while yet. January soybeans closed 6’4 lower at 900’4 today. Support is around 895’0 with resistance at 915’0.
Wheat also failed on a lack of new bullish news today but momentum is still pointing higher. The Russian Ag Ministry is planning to meet with exporters next week to possibly discuss curbing exports. That news has boosted the wheat market this week and pushed Chicago wheat to 532’0 in the overnight which is above last week’s high. However, it couldn’t hold onto the strength today and March Chicago wheat closed 6’0 lower at 530’0. There remains the potential to see a move up to 545’0.
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.