Grain and Livestock Market Update

On Thursday, grain futures and hog futures declined, while cattle prices saw an increase.

Grain Futures Face Resistance

According to Dave Chatterton from Strategic Farm Marketing, corn, soybeans, and wheat all experienced a drop after reaching significant chart resistance. “It seems you can’t get $4.25 for corn, $10.30 for soybeans, or $5.25 for Chicago wheat,” he remarked.

There’s also a lack of recent developments to support price increases in these areas, especially since the October WASDE report was delayed due to a government shutdown.

Stable Management of Corn and Soybeans

Chatterton noted that domestic levels of corn and soybeans remain robust, even as futures and spot prices decline. While this is partly due to the completion of the soybean harvest and lower yields in some regions, farmers are also choosing to store their bushels, anticipating future price increases tied to tighter standards and potential deals with China.

China’s Potential Purchases

There’s speculation that China might be buying U.S. soybeans, as CIF and PNW bids appear strong and futures spreads are tightening. Similar purchases were made by China during its government shutdown in 2018. However, since the USDA does not provide immediate reports on sales or weekly exports, any buying can happen without much visibility.

Chatterton pointed out that the funding source has not yet confirmed whether this activity is indeed linked to China, leaving the market guessing for now.

Absence of the WASDE Report

The USDA’s October WASDE report was not released on Thursday and will likely come out all at once, which may dilute its effectiveness. Although Chatterton expressed some skepticism regarding the USDA’s previous forecasts, particularly on yields, he thinks this information would have been beneficial for the market.

He still believes that average corn and soybean yield reports are declining, but the extent of this decline is uncertain.

Record Highs for Cattle Futures

Cattle futures have risen for five consecutive days, with both feeder and deferred live cattle futures hitting record highs. Chatterton noted that stable Choice boxed beef prices give traders hope for cash trading stability and possibly higher prices this week, contributing to a rise in cash feeder prices.

Potential Obstacles to the Cattle Surge

Chatterton mentioned that there are no current indications of the rise slowing. However, several factors could disrupt this upward trend:

• Reopening the border to Mexican cattle imports.
• Removing the additional 50% tariff on Brazilian beef imports.

Decline in Lean Hog Futures

Lean hog futures continue to fall on Thursday due to ongoing fund liquidations following recent market disruptions, and Chatterton anticipates this trend will persist.