MORNING LIVESTOCK REPORT
By Dennis Smith
Thursday, September 30, 2021
CORN AND SOYBEANS:
Quarterly stocks will be released at 11:00. I’m focused on the corn stock figure. IMO, there’s a reasonablly good chance it will be friendly. I say this because of the super strong basis that has been in place all summer and remains in place in many areas today. Palm oil cash and futures prices continue to rise, lifting soyoil with them. Malaysian exports for Sep were up 34%. We’re long Dec bean oil after being out of the market for more than a couple of months. We rode the market higher last winter/spring. I’m watching the Dec for a close above 5875 to confirm a meaningful bottom. We have no positioin and no strong opinion in the soybeans. Meal remains a dog. I can’t be bullish soybeans until I’m bullish meal. The wheat market will get a ton of information today. Along with quarterly stocks is small grains inventories. We’ve recently liquidatd all wheat futures positions.
Open interest in hogs was up over 7k yesterday. I consider this bullish. The cutout was up $7.00. I consider this bullish. The Dec still resides 900 points under the hog index, I consider this bullish. Cash, for the first time in weeks, was quoted higher yesterday, I consider this bullish. So, guess what, I’m expeceting a resumption of the upside move in hog futures today. My sources have been reporting that Mexico has been heavily involved in our ham market at current low price levels. Indeed. Weekly pork export sales were reported at 42,500 MT, up 36% from the 4-week average. Mexico was in for 20,400 MT followed by China booking 14,000 MT. The Mexican business was totally expected. But I ask; why would China be such an aggressvie buyer of U.S. pork when Chinese domestic prices are in the toilet and all producers are said to be losing their shirts? I have a sneaky suspecision that they’re fighting another rapid spread of ASF, culling the herd and marketing hogs in a panic. Look for a higher open and a higher close today.
Cash steer trade was flat to slightly lower yesterday. However, the volume of trade was active and upward revisions are expected later this morning. Open interest was down 776. Open interest in FC jumped by 1,128 on their poor close yesterday. Is this a bear trap? Beef was down hard, choice dropped $4.23. Don’t worry about this. Beef is elevated and packer processing margins remain north of $700 per head. There is nothing wrong with beef demand….I repeat, there is nothing wrong with beef demand. Weekly beef exports were solid, 16,100 MT, up 9% from the 4-week average. The largest beef buyer last week was Japan, followed by South Korea followed by China and then Taiwan. Shipments were reported at 18,500 MT, up 3% from the 4-week average.
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