Walsh Daily Recap at Close 11/10

Crush

The January board crush narrowed about 20 cents to roughly $1.80. Beans rallied far harder than the products did, so the cost side of the margin rose faster than the revenue side. Meal gained 5.1 and oil gained 74 points, but neither kept pace with a 39¾ cent move in beans. Using the January contracts, meal at 326.0 works out to about $7.17 of product value per bushel and oil at 62.77 adds about $6.91, against a bean cost of $12.28. Oil is carrying close to half the product value right now, which is high by historical standards and reflects how far meal has come down over the past month. USDA raised soyoil ending stocks to 1,698 million pounds and meal ending stocks to 400 thousand short tons in the November report, so neither product got a supply idea out of the data.

Soybeans 

January soybeans settled at 12.28, up 39¾ cents, and finished near the upper end of the day’s range. The November WASDE was the pressure. USDA put the national yield at 53.3 bushels per acre and production at 4,574 million bushels, both below what the trade was looking for, and cut ending stocks to 300 million bushels from 315 million. That puts the stocks-to-use ratio at 6.50 percent. Exports were left at 1,720 million bushels. On the world side, global ending stocks came in at 123.50 million tonnes. Chinese buying interest and the pace of recent sales were also part of the conversation. The contract closed above its 14-day average at 12.24⅞ and below its 21-day at 12.37⅞, the first close above the 14-day during this decline.

Soybean oil

December soybean oil settled at 62.77, up 74 points. Oil followed beans and the broader complex higher but gained less than beans did on a percentage basis. Palm oil prices in Malaysia have been moving lower, and because palm and bean oil compete directly in food, feed and biodiesel, cheaper palm pulls on bean oil values. USDA raised ending stocks to 1,698 million pounds and left the season-average price at 68.00 cents, with domestic use at 33,005 million pounds and food and feed use at 15,205 million pounds. Biofuel policy remains the main demand question for this market. The contract is trading below both its 14-day average at 64.56 and its 21-day at 65.32.

Corn

December corn traded at 4.49, up 9¾ cents, with a range of 4.38¾ to 4.55½ and volume of 365,903. USDA cut the national yield to 179.6 bushels per acre from 181.2 and lowered production to 15,893 million bushels, which took the market up to the day’s high before it settled back off the top. Ending stocks came down to 1,758 million bushels for a stocks-to-use ratio of 10.81 percent, and the season-average price was left at 4.60. Feed and residual use was put at 5,975 million bushels and exports at 3,275 million. Export inspections have been running at a solid pace and the demand side of the balance sheet continues to hold up. Harvest is in its late stages across most of the Corn Belt. The contract is trading below both its 14-day average at 4.50¾ and its 21-day at 4.58.

Wheat

December wheat settled at 5.92¾, up 4¾ cents, and gained the least of the three grains. Wheat traded higher mostly on the pull from corn and beans rather than anything in its own balance sheet. USDA left production unchanged and raised ending stocks to 743 million bushels on lower food use, which was cut to 957 million bushels, putting the stocks-to-use ratio at 40.03 percent. World ending stocks were put at 280.82 million tonnes. Black Sea export offers remain competitive and continue to take business that US origin competes for. Winter wheat conditions in the southern Plains have been adequate. The contract is trading below both its 14-day average at 6.08⅛ and its 21-day at 6.20⅜.

Cattle 

December live cattle settled at 219.20, up 3.00, and January feeders settled at 326.675, up 2.50. Both contracts bounced after several sessions of losses. The Cattle on Feed report showed a smaller number of cattle in feedlots, and cash trade in the country has been the main thing traders are watching. Boxed beef cutout values have been mixed, with the choice and select spread moving around day to day. Packer margins remain tight, which affects how aggressively they bid for cattle. Feeder cattle continue to take direction from the deferred fed cattle contracts and from corn, since cheaper feed supports what feedlots can pay. December live cattle is trading below both its 14-day average at 220.706 and its 21-day at 221.871, and January feeders are below both their 14-day at 330.024 and their 21-day at 330.968.

Hogs

December lean hogs settled at 55.80, down 7½ points, and were the only contract in the group to finish lower. Cash hog prices have been soft and pork cutout values have come down from earlier levels, with bellies and hams the weaker primals. Slaughter has been running at a seasonal pace and the market stayed near the bottom of its recent range for most of the session. December is the front month and carries a discount to the deferred contracts, which reflects where traders see cash going into the winter. The contract is trading below both its 14-day average at 58.868 and its 21-day at 60.728.

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Theodota Georgiadis

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