You may have heard the phrase “once in a blue moon”. It is classified as an idiom, and in common use means something happening very rarely or once in a long while. If you were asked how many times corn, soybeans and wheat all rally during October, offering attractive selling prices right off the combine, you might well say “once in a blue moon”. The seasonal charts are all going to show you that on average corn and soybean prices bottom for the year in late September and early October. That doesn’t necessarily mean you have to run to the elevator and sell everything right away. A blue moon actually occurs about every 32 months. It simply means two full moons in the same month, or the fourth one in a three month quarter. Not common, but they happen. It also happens to be occurring this month! There will be a full moon on Halloween, and that is the second one during October. Whether it actually looks blue depends on atmospheric conditions. It fits with all the other weird stuff that has been happening in 2020!
Corn futures continue to rally, up 4.3% for the week. USDA’s weekly Export Sales report showed that 1,831,566 MT (72 mbu) were sold on the week ending 10/15. That was above the range of pre-report estimates, up 180% on the week and 273% above the same week last year. Japan and China were the top buyers on the week with 490,100 and 433,500 MT respectively. The FAS showed total export commitments are now 28.225 MMT, 48% of the full year WASDE export estimate vs, the 5-year average of 32% for this date. Unshipped sales on the books on October 15 totaled 903 million bushels vs. the five year average for that date of 427 million. CFTC data on Friday showed spec fund traders in corn futures and options added another 47,956 contracts to their net long position, taking it to 218,825 contracts as of October 21.
The three wheat markets were higher again this week. Minneapolis spring wheat was in the lead for a change, up 3.2%. KC HRW was up 2% and Chicago gained 1.2%. The weekly Export Sales report showed a slow 467,455 MT in wheat bookings during the week ending 10/15. Total commitments for 20/21 exports are now 15.545 MMT, 59% of the USDA full year forecast. Friday’s Commitment of Traders report showed managed money specs increasing their net long position by 11,138 contracts in Chicago wheat futures and options in the week ending 10/21. They were net long 49,728 contracts. In KC wheat they held the largest recorded net long position in nearly 2 years at 38,146 contracts. In the breaking news category, the spec funds in MPLS spring wheat went net long for the first time since September 4, 2018! Their CFTC net long was 4,492 contracts on October 21.
Soybean futures more than erased the 15 ½ cent loss from the previous week, rising 33 ¾ this week (3.2%). Nearby meal was up 5.1% on real and threatened disruptions to Argentine exports. Soybean oil was up 3.4% to cancel out the 3% loss from the previous week. The USDA weekly Export Sales report showed 2.226 MMT (81.8 million bushels) for the week ending October 15. That takes the total commitments for the new crop marketing year to a massive 45.3495 MMT. That is 76% of the full year USDA forecast, vs the 48% average for this week. The export program is definitely front end loaded. Friday’s Commitment of Traders report showed spec traders adding to their bullish bet in soybean futures and options by 5,448 contracts in the week ending 10/21. They were net long 231,892 contracts on that date. The all-time record spec fund net long is 253,889 contracts. Commercials held a record large outright short of 728,305 contracts (3.64 billion bushels), revealing huge cash bean ownership.
Cotton futures were up 2%, and December posted the highest spot month futures price (72.13) since May 2019. The weekly Export Sales report showed current year upland cotton export bookings at 227,760 RB during the week ending on 10/15. That was 10% more than the same week a year ago. Total commitments are now 8.461 million RB, down 9% from last year at this time. They are 62% of the full year WASDE forecast, well above the 55% average pace, however. Managed Money spec funds in cotton futures and options added 5,253 contracts to their net long position during the reporting week, expanding it to 65,195 contracts as of COB on October 21.
Live cattle futures were under pressure again this week, losing another 4.7%. Cash trade was $1 to $2 lower, with a reported range of $102 to $106.50. Feeders felt some pressure from the higher feed costs and were down 4% in the active November contract. The CME feeder cattle index was $134.01, down a sharp $6.21 for the week. Weekly beef production was down 1.5% from the previous week, and 2.6% larger vs. the same week last year. Total YTD beef production is still 1.2% lower yr/yr on 3.8% fewer cattle slaughtered. The industry has never caught up to spring COVID-19 processing losses. Wholesale beef prices lost more ground this week. Choice boxes were down $2.54 or 1.2% from the previous Friday.
Select boxes were down $2.12/cwt on the week for a 1.1% loss. The Export Sales report had weekly beef sales rebounding to 21,717 MT. US beef exports YTD are now 1.17% above last year. The weekly Commitment of Traders report showed spec funds in live cattle futures and options at a net long position of 34,941 contracts as of Tuesday, a reduction of 21,097 from the week prior as prices were tanking. Friday night’s USDA Cattle on Feed report showed a 5.9% rise in September placements vs. year ago, which meant a 3.8% year/year increase in the number of cattle on feed October 1. Monthly slaughter was 6.2% larger, but not enough to offset the numbers coming in from dried up pasture, or out of Mexico.
Lean hog futures lost $2.77 for the week, all of it on a limit down Thursday. The CME Lean Hog index was up $0.11 from the previous week at $78.60. US pork production was up 0.2% from the previous week, and up 0.4% from year ago. YTD production is 1.8% higher on 1% more animals harvested. Average carcass weights are within a pound of last year. The pork carcass cutout value took a giant step backward, losing $5.94 per cwt or 6% this week. Hams were well supported, but bellies and butts were shedding value. USDA showed weekly pork export sales almost the same as the previous week (26,800 MT). China has stepped up weekly shipments to ~12,500 MT, but isn’t buying replacement volumes. The Cold Storage report on Thursday showed US inventory is still very low, and not rising seasonally. Friday’s CFTC Commitment of Traders report indicated spec traders added another 4,904 contracts to their net long position during the week. That put them long 42,058 contracts of futures and options contracts on 10/21.
Cattle traders will begin the week reacting to the Cattle on Feed report, which was released after the close on Friday. Soybean traders will be reacting to any surprise futures positions (or loss of positions that were called away) resulting from the late rally in November beans just ahead of expiration. USDA Export Inspections will be released on Monday morning. Crop Progress data will be out Monday afternoon. Wednesday will include the weekly EIA ethanol production/stocks data for this week. USDA will release their weekly Export Sales report on Thursday morning. October feeder cattle expire on Thursday. October live cattle go off the board on Friday. Friday is also first notice day for November futures deliveries in soybeans and canola.
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There is a risk of loss in futures and options trading. Similar risks exist for cash commodity producers. Past performance is not necessarily indicative of future results.
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