Monday December 11, 2023 


The COT report confirmed that funds are covering shorts in corn and wheat while selling in the soy complex. It’s well documented that Brazil will have a record large soybean crop due to expanded acreage. The crop size is edging lower but still large. The weather charlatans have blown it again. I hope to exit our March soybean three-way risk reversal at a small loss on a rally before the end of the year. I intend to hold the bullish March corn three-way risk reversal. Yes, I remain bullish corn. In the wake of the wheat rally U.S. wheat is no longer the cheapest for China to source. So, the speculation that China is done with U.S. wheat. Keep in mind the funds are still substantial shorts in both corn and wheat.  


The COT report shows that funds hold the second largest short in lean hog futures (-17,900 cars). Open interest in hogs fell 1,146 from Friday’s trade. Open interest in Feb calls was up 2,205 but open interest in Feb puts soared higher by 5,143. The Feb 62 put saw open interest rise by 2,574. Is someone speculating that the upcoming hog & pig will be bearish? Many in the industry believe that losses sustained in raising hogs this year rival that of 1998. Not good. Feed costs have come down but corn is still not cheap. In the meantime, non-feed costs have risen. Of course, during all of this hog prices have languished. The key moving forward is two-fold. Deep culling of the herd is required. And improved demand for U.S. pork is necessary. I’m seeing lots of signs that demand for U.S. pork is improving. I’m willing to speculate, through Jun LH call spreads, that culling of the herd and improved demand for pork will drive prices higher. Summer hogs have been sideways for months. The hog & pig comes out one week from Friday. Friday’s higher carcass should usher in buying on the opening bell today.  



Nine hundred and forty-four, that’s the weekly number of boxed beef loads that traded last week. This is a huge spike and is by far the highest weekly load count of the year and the highest going back to Nov of 2020. Why is this significant? IMO, end users that realize what’s coming ahead (fewer cattle numbers) are aggressively booking beef priced below $295 in the choice. They know beef values will not remain this low for very long. The COT report showed that funds were only long about 27,000 contracts. This is down from 120,000+ in Sep. Packers continue to throttle the cash and improve their margins. Many say margins are still red. Don’t believe it, they’re making money. Despite the lower cash, futures remain sharply discounted. There was no obvious feature in the options Friday. FC volume was half of total open interest. IMO, there’s a high chance that both fats and feeders bottomed out last week. On-feed comes out one week from Friday and there’s talk that placements could be down as much as 10%. It’s entirely possible that placements will drop for several months. Is it possible that LC futures gap higher today? We’ll find out soon.  

Dennis Smith publishes his widely read evening livestock report daily. For a free 30-day trial send an email to