Good Day,
Enthusiasm is lacking. Grain markets made an about face to start the week from the mostly negative price action that has plagued them for the last month and a half, but they did not garner any Friday follow through. Weekly price action wasn’t dismal, but Friday’s close was negative across the board. Friday trade is not the end all be all but without follow through on a Friday for the early to mid-week favorable action you can’t put together a solid case for the nearby lows being in place just yet. There are potential signs but most of those have been mentioned at this point and they aren’t worth the reading space without some conclusive price action to back it up.
| Product | Weekly Net Change | Closing Price | Product | Weekly Net Change | Closing Price | |
| Mar Corn 24 | 0.0075 |
4.4625 |
March Soy 24 | -0.0400 |
12.0925 |
|
| July Corn 24 | -0.0075 |
4.6350 |
Nov Soy 24 | -0.0625 |
11.8500 |
|
| Mar KC Wheat 24 | 0.1675 |
6.2475 |
Mar Bean Meal 24 | -7.5000 |
349.00 |
|
| July KC Wheat 24 | 0.0925 |
6.2325 |
Mar Bean Oil 24 | 0.0300 |
46.93 |
|
| Mar Wheat 24 | 0.0700 |
6.0025 |
||||
| July Wheat 24 | 0.0650 |
6.1625 |
There was some excitement in the ag space this week.
Cattle Market Thaws Out
June Live Cattle futures were up $4.075 for the week settling at $178.45/cwt. which is a noteworthy level. The 200-day moving average is $179/cwt, the 100-day moving average is $178.5/cwt and the 50% retracement level is $178.4/cwt. The 50% retracement coming from the contract highs put in at $194/cwt on September 15th to the lows of $162.775/cwt on December 6th. All three of these levels were hit today… on a Friday, with a positive close.
June 2024 Live Cattle
The last three weeks of weather have been extreme for large portions of cattle feeding country. Multiple rounds of cold, blowing snow with sprinkles of freezing rain in between and now several getting a closing round of rain this week to leave things a sloppy mess. Less than ideal conditions is an understatement. Carcass weights were down 10 lbs. from the previous week at 927 lbs according to the USDA, still historically heavy but a big one week drop. It’s unlikely that carcass weights climb back to previous levels in the next month as it will take time to get the lbs. lost in the poor weather put back on (for the ones that made it through).
Managed money (funds) had maintained historically large net long positions in the live cattle trade through most all of 2023 until September 26th. According to the Commitment of Traders (COT) report on September 26th Managed money was long 101,860 contracts of Live Cattle Futures and the market had peaked a weak earlier. The most recent COT report showed Managed Money long just 13,770 contracts as of January 15th.
The milk turned sour in September for the funds holding long positions. The fundamental narrative for bullish cattle prices didn’t change necessarily, but the timeline did with Cattle on Feed reports not reflecting tightening supplies when they were expected. Everything bullish was pushed out further on the horizon and the bridge became too far. If new highs are to be put in the funds will need something fresh to erase the sour memory of the 2023 - 4th quarter. The recent weather, while terrible for livestock producers, may be a pallet cleanser for the funds.
“I believe when life gives you lemons, you should make lemonade… and try to find someone whose life has given them vodka, and have a party” – Ron White
On the date of publication, Derrick Hermesch did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Disclosure Policy here.
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