Daily Comments

At first glance, the weekly corn export sales figure of 1,816,000 MT, or 71.5 million bushels, looks quite impressive, but that number was actually below even the lowest trade estimate. As noted previously, Mexico has been on a buying spree, and last week accounted for 63% of the net total, taking 1,147,800 MT.  The next two closest buyers were unknown destinations, with 147.1k MT and Colombia taking 141.1k.  There was also a sale of 611,400 MT for the 2024/25 crop year, and if you guessed Mexico as the buyer, you would be correct.  Soybean sales came in as expected at 808,500 MT or 29.7 million bushels.  China bought 589.2k, 72% of the net, Spain bought 73.3k, and Bangladesh was in for 56.2k.  Wheat sales were towards the low end of expectations and were down 50% for the week, with a total of 273,100 MT, or 10 million bushels.  The Philippines were the top buyer with 94k MT, followed by Taiwan and Mexico with 91k and 42.4k, respectively.  At the meat counter, beef sales dropped 25% to 13,300 MT, while pork sales were up 57% to a net 43,000 MT.  Mexico was the largest buyer of pork with 14,600 MT, with China in the number two spot with 9,400 MT.

At first glance, the weekly corn export sales figure of 1,816,000 MT, or 71.5 million bushels, looks quite impressive, but that number was actually below even the lowest trade estimate. As noted previously, Mexico has been on a buying spree, and last week accounted for 63% of the net total, taking 1,147,800 MT.  The next two closest buyers were unknown destinations, with 147.1k MT and Colombia taking 141.1k.  There was also a sale of 611,400 MT for the 2024/25 crop year, and if you guessed Mexico as the buyer, you would be correct.  Soybean sales came in as expected at 808,500 MT or 29.7 million bushels.  China bought 589.2k, 72% of the net, Spain bought 73.3k, and Bangladesh was in for 56.2k.  Wheat sales were towards the low end of expectations and were down 50% for the week, with a total of 273,100 MT, or 10 million bushels.  The Philippines were the top buyer with 94k MT, followed by Taiwan and Mexico with 91k and 42.4k, respectively.  At the meat counter, beef sales dropped 25% to 13,300 MT, while pork sales were up 57% to a net 43,000 MT.  Mexico was the largest buyer of pork with 14,600 MT, with China in the number two spot with 9,400 MT.

Outside of this, ag-specific news is rather sparse this morning, but there are a few tidbits from the financial sector to pass along.

Weekly jobless claims were up 2,000 last week to 207,000, which was a little better than the expected 5,000 increase.  Trade balance figures for August have been tabulated, and during the month, we exported $256.03 billion of goods and services, up 1.6%, and imported $314.33 billion, down .7%, for a deficit of $58.3 billion.  Economists had expected a number around -$60 billion; the previous month, it stood at -$65 billion.

In case you have not been watching, the yield curve between 2-year and 10-year, while still inverted, has been trending positive for the past several months.  There has been considerable hand-wringing and forecasts of an impending recession since we inverted in June of last year, so at first blush, one might assume this is a positive development.  Unfortunately, that is not the case, as historically, it is not until after you have moved back to a positive yield curse does a recession take hold.

 

There is one market that may already be preparing for such: crude oil.  I noted yesterday that Opec+ plans to continue with the reduced output at least through the end of this year, but instead of rallying on that news, crude turned sharply lower and is on track to suffer the most significant weekly decline since March.  While I would expect Brent futures to find support at the 50% retracement level of 85.63, bears appear to have moved into the driver’s seat once again.

There is one market that may already be preparing for such: crude oil.  I noted yesterday that Opec+ plans to continue with the reduced output at least through the end of this year, but instead of rallying on that news, crude turned sharply lower and is on track to suffer the most significant weekly decline since March.  While I would expect Brent futures to find support at the 50% retracement level of 85.63, bears appear to have moved into the driver’s seat once again.

Energies and metals are both under pressure this morning.  Notes and bonds are mixed, with the dollar and equities lower.

 

Wheat

Last Friday, December wheat posted a dramatic looking outside lower reversal and into new lows for the year, but since then, it has never moved outside of the range recorded that day.  While this lack of follow-through to the downside may suggest that the spike down was the final flush-out, it would be premature to suggest the bears are ready to retire just yet.  Oscillators have again poked into the overbought zone, and lacking fresh, positive news, prices will likely falter from the 5.70 level.  Cycle counts line up for today, the 12th, and the 23rd, with that last date marking the completion of the 1st cycle of 90-calendar days from the July high.

Bulls in KC futures have been given a minor reprieve overnight, but it may be only temporary unless someone or something comes to the rescue with surprisingly good news.  As with Chicago, we have been unable to move outside of last Friday’s range thus far in the week and once again have short-term oscillators returning to the overbought zone.  Today marks the completion of the 4th cycle of 90-calendar days, or a complete circle from the high traded in October last year.  After this, cycle counts come in between the 12th/16th, and then the 23rd/27th.

Corn

In each of the past five sessions, December corn has flirted with overhead resistance at 4.90 but has never found a reason to push beyond that mark.  While still possible, I suspect Longs could be getting a bit disillusioned and may begin looking for greener pastures elsewhere.  A close back below 4.80 should open the gates for a slide back to the 4.70 level.  Cycle counts ahead on the 11th/12th, the 23rd, and the 3rd of November.

March corn has run into a brick wall at 5.05, and one has to suspect that bulls are beginning to grow a bit more impatient each day they cannot push through that zone.  If a few more head for the exits and we close below 4.95, odds are we will then be headed down for another test of the 4.88 to 4.80 zone.  Cycle counts ahead line up for the 11th/12th, the 23rd, and the 3rd.

Soybeans

November beans were pushed away from the 12.82 level again yesterday, and gauging from the overnight pressure, that action left more than a few bulls feeling discouraged.  We have not yet reached the lows of the week, but bears appear to have the upper hand, and a slide down into the 12.57/12.47 zone would not come as a surprise.  That said, we already have oscillators oversold and signaling a possibly low, so I would expect buying to materialize on such a move.  Cycle counts cluster together into the weekend and then between the 13th/18th.

Last Friday, January beans pushed beneath the 13.00 level for the first time since early August and have struggled to poke back above that mark ever since.  We do have oscillators right on the basement floor and showing signs of a possible low, but there remains a possibility that we could see a stab down into the 12.71/12.56 zone before witnessing a turnaround.  Cycle counts cluster together through the 8th and then between the 13th/18th.

Soy Oil

Bears have prevailed once again in the bean oil market and have taken December futures into lower lows for this swing.  In the process, we have now completed a 50% retracement of the entire range since this market turned higher back in June.  Be that as it may, oscillators are set to turn lower, and a close below 55-cents would open the door for a push down to the 52.50 level.  The next cycle count lines up for the 11th.

Soy Meal

The price performance in meal this week has not been exactly encouraging either, but at least in this case, we have oscillators already sitting in an oversold position.  There remains a possibility that we could see a stab down to the 362 level, but I suspect this swing lower should be complete by the beginning of next week. Cycle counts ahead are on the 13th, the 24th, and the 3rd/6th.

Cotton

December cotton posted an outside range with a lower close yesterday but still managed to finish just above the prior day’s low.  This contract is now in negative territory for the week, but with oscillators in the oversold zone, bears may not have much ammunition left.  Support should be solid between 86.60 and 86.30.  The next cycle counts are on the 6th and the 17th.

Lean Hogs

Lower lows for December hogs again on Wednesday, but this time, prices recovered to close higher for the first time since last Thursday.  While I suspect this is indicative of a low close at hand, it would be premature to suggest we are there just yet.  A stab down to 67.45 should still be in the cards.  The next cycle count is on the 9th of October.

Live Cattle

 December cattle posted a lower low for the swing again yesterday but did recover to close slightly higher and above the critical 185.75 level.  As a percent of prices, this swing lower is comparable to other setbacks we have witnessed over the past five months. Still, as I have commented, we need to hold right here if there is any possibility for a push into higher highs. Oscillators are signaling that should be at a low, but it is time for the bulls to step up once again.