It is difficult to chalk it up to anything more than pre-holiday profit-taking, but we have witnessed a bit of a washout overnight in the grain and soy markets. Shall we label it Turkey Tuesday? At this point, no significant damage has occurred, and in fact, wheat has already begun to recover. Still, when you have markets that have been advancing for more than 14 weeks and sitting in very overbought technical positions, one should never assume that it could not be the beginning of something more significant. We all know what can happen when we ass-u-me.
There is one commodity that continues to advance, and that is crude oil. Overnight, Brent futures were successful at pressing through the early September peak, and if we can hold these gains, the door could be open for a poke up to the $50 level. This move is at least partially stimulated by thoughts that Opec and Russia will agree to continue keeping a lid on production when they meet next week, but possibly even more so by the prospect of seeing Covid vaccines available in the not-too-distant future. This will potentially be a significant step forward in bringing the travel industry back to life. Qantas Airlines of Australia has already announced that they will require proof of vaccination for all international flight passengers.
Even though China has made great strides in rebuilding their hog herd, they continue to be large pork importers. During the month of October, they brought in 330,000 MT, which was an 80% increase over the same month last year. For the first ten months of the year, this brings the total up to 3.62 MMT, an increase of 126% over 2019. Beef imports in October were up 12.2%.
Outside of this, the news is a bit sparse this morning. Keep in mind that after the close tomorrow, grain and soy markets will not reopen until 8:30 CST on Friday morning and will close at 12:05 that day.
Looking at the macros, as I already mentioned, energies are higher, gold and silver are under pretty solid pressure, equities are strong, and the U.S. Dollar is soft. This final market is limping along at the lows of the year but just cannot seem to take that next step lower. Short-term it is sitting in a very oversold position, so we made need to wait into the New Year before we slip into lower territory.
