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Is There Any Ammo Left? Ag Marketing Report 10/07/2024
This week in the grain trade started out with a round of higher trade, spurred by a bullish USDA report, at least for corn. However, as Thursday showed, so did selling across the marketplace. On the early week action, the front month contracts for corn, beans, and the wheats all reached some respective 38.2% retracement levels off the summer highs. That what pretty much it, as the market pulled back in the following days. So, that begs the question, is the rally over? Are the bulls out of bullets, or was the correction late in the week more of a reloading period for the bulls and a restocking before another attempt?
Corn futures were helped out by an early week USDA assist, as December closed with a 6 ¾ cent gain (1.61%). The week got started off with NASS tallying September 1 corn stocks at 1.76 billion bushels, which was well below estimates and calls for the 2023/24 ending stocks figure in the monthly WASDE to drop by another 52 mbu. The weekly Crop Progress report showed 96% of the US corn crop dented by September 29, with 75% listed as mature. Harvest across the country was shown at 21% complete, ahead of the 18% average. Condition ratings slipped 1% at 64% gd/ex, with the Brugler500 index down 1 point at 363. EIA data showed ethanol production back up 21,000 barrels per day to 1.015 million bpd in the week that ended on September 27. Monthly Grain Crushings data showed 472.7 mbu of corn used for ethanol in August, 7.02% above last year. Export Sales data tallied new crop sales jumping out to 1.684 MMT in the week ending on September 26. That took export commitments to 16.428 MMT, which is 28% of the US export forecast and lagging the average sales pace of 33% this early in the marketing year. The weekly Commitment of Traders data indicated managed money in corn futures and options cutting back another 63,600 contracts from their net short position in the week that ended on October 1, to 67,669 contracts by that Tuesday.
Wheat felt some pressure late in the week but managed to pull out gains thanks to the higher first half of the week. Roles were reversed this week, as Minneapolis spring wheat was in was the leader, rather than playing catchup, and up 30 ¼ cents (4.97%). December Kansas City saw a gain of 21 1/4 cents (3.68%) this week. Chicago December was 9 ¾ cents higher (1.68%) for the week. NASS showed all wheat production at 1.971 bbu, on Monday an 11 mbu drop from the August Crop Production report, with much of that due to a 12 mbu drop in expected winter wheat output. September 1 wheat stocks were tallied at 1.985 bbu, slightly below estimates. Crop Progress data tallied the winter wheat crop at 39% plated by last Sunday, 1% ahead of normal. Export Sales data indicated US export business picking up for the week of 9/26 to 443,697 MT. That took export sale commitments to 11.713 MMT, which is just 52% of the USDA forecast for export and lagging the 56% average. Friday’s Commitment of Traders report showed CBT wheat spec traders trimming 3,516 contracts from their net short to 22,953 contracts as of 10/1. In KC wheat, they took the net short position back down 4,676 contracts to 15,270 contracts as of Tuesday.
Soybeans saw a pullback this week, as November was down 28 cents (2.63%). Soybean meal was again the driver of the complex this week, only to the downside, with December losing $13.60/ton (3.95%). Bean oil was up 161 points (3.95%) on the week. September Grain Stocks data was released on Monday, with NASS showing 342 mbu of soybean stocks as of 9/1. That was below the average trade estimate and up 2 mbu from the September WASDE projection. Monday’s Crop Progress report showed 81% of the US soybean crop dropping leaves as of last Sunday, with harvest 26% completed. NASS left condition ratings at 64% gd/ex, as the Brugler500 index was unchanged at 362. The monthly Fats & Oils report showed 167.54 mbu of soybeans crushed during August, down 13.31% from the month prion and 0.85% below last year. Export Sales data showed new crop business slipping this week to 1.44 MMT. That was still impressive as US exporters play catchup. That took the accumulated shipped and unshipped sales to 18.942 MMT. That is 38% of USDA’s expected export total in their WASDE balance sheet, now 9 percentage points back of the average pace. CFTC’s Commitment of Traders report showed soybean spec funds slashing another 40,092 contracts from to their net short as of Tuesday, October 1 at 34,886 contracts.
Live cattle saw some strength this week, continuing to be propped up by the cash market, with October up $3.25 (1.77%) on the week. Cash trade was mostly $186 in the South, up $1 from last week, with trade in the North at $296 in the beef. Feeders were up another $2.55 (1.03%) this week. The CME Feeder Cattle Index was up another $1.23 week/week to $246.78. Wholesale boxed beef prices rebounded again this week, as Choice crept back above $300, up $5.89 (2%) on the week to $302.58, while Select was $5.53 higher to $287.61. Weekly beef production was back up 0.3% from the previous week and 1% above the same week last year at 525.4 million lbs. That left the YTD beef production down 0.7% from the same time a year ago, with cattle slaughter down 3.8%. USDA reported export sales of 22,542 MT for beef in the week of 9/26, a 7-week high. Export shipments were a calendar year high of 17,739 MT. Commitment of Traders data showed cattle specs adding 11,180 contracts to their net long to 63,404 contracts. Specs in feeder cattle added to their net long by 3,674 contracts to 5,701 contracts as of October 1.
Hogs reverted from last week’s weaker trade, with December up $2.775 on the week (3.78%). The CME Lean Hog Index was back up 83 cents this week at $84.90 as of October 2. USDA’s Pork Carcass Cutout was back down $1.44 this week to $94.31. The butt primal was the leader to the downside, down $4.37, with the loin, picnic, and rib following suit. The belly and ham were both higher. Weekly pork production was up 1.7% from last week and 1.3% above the same week last year at 548.8 million lbs. YTD hog slaughter has run 1.1% above last year, with pork production 1.6% higher. This week’s Export Sales report showed 43,355 MT in pork bookings during the week of 9/26, an 18-week high. Export shipments were at a 3-week low, at 25,887 MT. Specs in lean hog futures and options added another 5,447 contracts to their net long position as of 10/1 to a net long 57,052 contracts.
Cotton futures continued the sideways shift this week with December up just 55 points this week. This week’s Crop Progress report showed 72% of the US cotton crop with bolls open by 9/29 and 20% of the crop harvested. Condition ratings were 6% lower to 31% gd/ex, with the Brugler500 index falling 14 points to 281 mainly on hurricane damage in the southeast. The monthly Cotton Systems report from USDA showed 1,271 RB consumed domestically in the US in August, a 3-year high for the month. Stocks were down 1 RB from last month at 970 RB. Export Sales data showed cotton bookings bouncing to 95,847 RB in the week ending on 9/29. Shipments also bounced from the previous MY low to just 107,071 RB. Commitments of shipped and unshipped sales are at 5.055 million RB, which is 46% of the USDA export projection, behind the 58% average selling pace. The FSA trimmed the Adjusted World Price for cotton by 25 points on Thursday, to 60.81 cents/lb. Weekly data from CFTC showed managed money spec funds in cotton futures and options slashing another 5,402 contracts from their net short as of October 1. By that Tuesday they were net short just 12,147 contracts.
Market Watch
We start next week with the weekly Export Inspections report out in the morning and the Crop Progress report out in the afternoon per normal. Monday is also first notice day for October live cattle. Census trade data will be released on Tuesday, showing August exports/imports. On Wednesday, the EIA will release their Weekly Petroleum Status Report, with October cotton futures expiring. On Thursday, USDA will release the weekly Export Sales report in the morning, with CPI data out that morning as well. On Friday, PPI data will be released, with the October Crop Production and WASDE reports out that day.
Tech Talk: December Corn
December corn got off to a good start, but slipped late in the week to ease the feelings of a ‘breakout.’ The 38.2% Fib retracement resistance was breached on Wednesday at $4.275 but couldn’t hold by Thursday. They also spiked the 100-day moving average at $4.26 3/4 but failed to hold. There is a triangle breakout with the count still active at $4.375 and a target on another run higher. Stochastics are in overbought territory and argue for a pullback. ADX is at 33 and shows an uptrend, with MACD riding bullish momentum. The rising regression channel also suggests the uptrend is still intact, with the lower channel support at $4.14 3/4. Support from the 18-day moving average ($4.15 ¼) and 60-day exponential moving average ($4.15 ¾) is also in that area.
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