MORNING LIVESTOCK REPORT
By Dennis Smith
312-242-7905
Monday, October 4, 2021
CORN AND SOYBEANS:
Corn has traded slightly lower most of the night with a challenge of the unchanged level early this morning. As harvest proceeds its becoming common for corn yields to be a bit disappointing but soybean yields continue to come in above expectations. It appears late rains helped soybeans but were too late to aid corn. Sources indicate that Russia will place export quotas on their wheat starting in February. Russia is fighting record high flour prices. This should keep the up trend in wheat alive. In addition, palm oil traded higher overnight with both futures and cash palm oil prices strong. Soybean oil futures set back hard over night. Look for a recovery to higher levels after the re-open today. We’ve placed sell stops at entry levels (breakeven) for recently established long Dec bean oil positoins. Soybeans look to grind lower along with meal. There is no bullish story in the soybeans.
LEAN HOGS:
Open interest edged up in hogs Friday, rising by 2,287 cars. Futures appear to be stabilizing after an impressive run higher last week in the wake of the bullish hog & pig report. Despite the improved supply outlook provided by the hog & pig report, packers continued to press cash hog values lower last week. The carcass was higher, but only up about $2.50 for the week. Seasonal hog numbers will be rising. Weights are increasing. Odds favor a resumption of the down trend in futures, although obviously starting from a higher level after last week. We are recommending to move back into Dec hedges which we pulled three days prior to the hog & pig. In addition, recommend working orders to secure a number of Dec 70 puts at 50 points to hold as ASF event protection.
LIVE CATTLE:
The early rally in LC futures on Friday fizzled and gave way to a lower close. Open interest was up 2,224 on the action. I’m not sure how to intrepret this. The struggle for feed lots to get current in their marketings continues. Last week’s show list was smaller than the week prior and the volume of negotiated trade was outstanding last week. However, in disappointing fashion, the weekly kill came in light, only 637k compared to 641 in the previous week. The beef continues to erode but we don’t consider this bearish. Demand is excellent and it’s expected to remain excellent into 2022. My sources report that beef should begin to stabilzie this week now that prices of the choice are below $300. Technically, I’m waiting for some kind of bullish indication of a meaningful bottom In the meantime we’re long a couple units of Oct 22 LC fututres with a sell stop resting at 12870. For today, no new recommendations.
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.
