Wednesday December 27, 2023
GRAINS:
Overnight news is quiet. Grain prices rallied last night in Europe, catching up with what happened in our market yesterday. Corn saw slightly higher open interest yesterday on the price rally. First resistance is just above the market at 481 followed by major resistance at 484. Look at what the bean spreads are doing. It’s important. The bull spreads are strong as the board takes carry out of the market. This likely precedes a strong flat price rally. This action in the spreads tells me that China will come after U.S. beans aggressively in Jan. I want to hold our Mar bean play and cancel orders to liquidate at even money. Otherwise, I have no new trade rec. I’m bullish corn.
LEAN HOGS:
Open interest in hogs was up 294 yesterday on light volume of only 29.3k. Cash was lower and cutout was steady. Margins improved. As the dollar grinds lower and pork prices also grind lower, exports are improving. The weekly export shipment number, due out Friday, is expected to be impressive. But hogs are entrenched in bear market fundamentals. This likely won’t change in the next few months. I’m looking to buy Feb puts if futures trade above 7000. Stay tuned. We liquidated our Jun call spreads yesterday.
LIVE CATTLE:
On the outside day higher close open interest in LC futures was up 253 cars on light volume reported at 36.6k. Beef has been higher for four consecutive sessions. There was no cash steer trade reported but most in the trade are looking for higher cash this week. The kill yesterday was only 100k so expect beef to continue to crank higher this week off the shortened kills. Packer margins are profitable. I’m not sure what to expect today. Just about anything can happen in this holiday environment. But I consider the fundamentals bullish so the path of least resistance should be upward. Stay bullish.
For a free 30-day trial to the evening livestock wire send an email to: dennis.smith@archerfinancials.com
The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. This report is a solicitation.
