Pure Hedge - Livestock and Grain
5/1/24
Apparently, I see things differently than other people. I have been Bearish the Cattle and Soybean Markets for months now, when most people disagreed with me. Having information in front of you is one thing, but interpreting it correctly means everything. I remain Bearish the Soybean and Cattle Markets. The Cattle Markets were hit hard again today, and the Feeders were more than five dollars lower again on their lows. June Live Cattle was 1.12 ½ lower today and settled at 173.85. Today's high was 176.85 and the 1-month high is 179.65. Today's low was 172.70 and 1-month low is 170.25. Since 4/1/ June'24 Live Cattle are 1.47 ½ lower or almost 1%. The Feeders looked very heavy today. August'24 Feeder Cattle were 3.75 lower today and settled at 251.75. Today's high was 256.42 ½ and the 1-month high is 261.80. Today's low was 250.27 ½ and the 1-month low is 243.27 ½. Since 4/1 August'24 Feeder Cattle are 0.10 lower or fractionally lower. I remember saying the Hogs looked heavy this morning. June'24 Lean Hogs were 2.05 lower today and settled at 100.42 ½. Today's high was 103.52 ½ and the 1-month and 52-week high is 109.65. Today's low was 100.32 ½ and that is also the new 1-month low. Since 4/1 June'24 Lean Hogs are 3.07 ½ lower or almost 3%. I believe the Livestock Markets will continue to slide lower tomorrow. The Cattle bounced more than a dollar off their lows just before the close, and just before the Fed number. The stock Market was rallying at the time as well, but the Stock market broke back down late in the Day. There is still too much weight in the Cattle Market. The feed lots are still full, and the extra 47 pounds will offset the lower numbers, and the seasonal demand, which could be shrinking. The USDA continues to test the Nation's milk supply and is now testing ground beef off store shelves for Bird Flu. If that was not enough the USDA is now concerned the Bird Flu could infect the Hogs as well, which would be concerning, given the possible leap from Pigs to Humans might not be that difficult. To date, there have been zero Bird Flu virus found in Hogs or Beef Cattle, to my knowledge. Obviously, some of the downside pressure in the Cattle and now the Hog Market came from the fear of something being found. It is all perception, and if the public is worried, demand goes away. I feel that with the weight in the Cattle Market so large, we will see it continue to break for another month or two, before we see an upswing in the Market. It looks possible for the Livestock Markets to test their monthly lows, or lower. My downside target in June'24 Live Cattle is 170.25, and for August'24 Feeder Cattle my first downside target is 249.75. My downside target for June'24 Lean Hogs is 98.60.
The Grain Markets rallied late today and followed the same pattern as the Livestock Markets on the close. July'24 Soybeans were 7 ½ cents higher today and settled at 1170 ¼. Today's high was 1171 ½ and the 1-month high is 1212 ½. Today's low was 1156 ¼ and the 1-month low is 1145 ¾. Since 4/1 July'24 Soybeans are 29 ¼ cents lower or almost 2 ½%. The Corn Market looked strong again today. July'24 Corn was 4 cents higher today and settled at 450 ¾. Today's high was 451 ½ and the 1-month high is 454 ¼. Today's low was 443 ¾ and the 1-month low is 435 ¾. Since 4/1 July'24 Corn is 1 ½ cents higher or about ¼%. The Wheat Market gave some back today and closed below $6.00. July'24 Wheat was 4 cents lower today and settled at 599 ¼. Today's high was 608 ¾ and the 1-month high is 633 ¼. Today's low was 593 ½ and the 1-month low is 550. Since 4/1 July'24 Wheat is 26 ½ cents higher or more than 4 ½%. I said many times that the Soybeans would break on Monday or Tuesday of this week, and yesterday they did. July'24 Beans were 6 ¾ cents lower at one point today. I believe they will continue to slide lower until the WASDE Report on May 10th. After the numbers are released, I believe the Soybeans will break substantially. I feel that the Report will show more soybeans planted in Brazil and in the US, than were expected or reported, and the yields in Brazil will be large. Weekly export inspections for Soybeans continued to be disappointing. China is still buying Soybeans from Brazil, and at the same time selling their old crop Beans. Yesterday, Datagro raised their Brazil production number by 1.6 mt to 147.9mt. That is closer to the USDA's number of 155mt. Brazil's harvest is about 94% done, and in line with the 95% average at this time. The CME lowered the daily trading limit in Soybeans from 95 cents to 85 cents. I wonder if that will come into play on May 10th. My lowest target level in July'24 Soybeans is 1053. The Corn market held in there yesterday and today. The Corn in Argentina is not doing well, and fewer acres of Corn were planted in the US this year. Argentina's Corn conditions fell to just 17% good/excellent, and harvest is behind schedule, with only 23% harvested compared to 30% this time on average. US Corn exports have been strong recently, and for the year, corn inspections are 32% above last year. I feel that the Corn Market can continue to rally from here. I believe $5.00 Corn will be seen sooner than later. The Wheat Market continues to be erratic. There is still dryness in Western Kansas, and I have not seen the rain they need forecasted yet. The Ukraine Wheat crop is estimated to be 11% smaller this year, and they need rain as well, and so does the Russian Wheat. The 10-day forecast there looks to remain day. There is a chance India will have to import Wheat this year, and if that happens, the sky is the limit. I feel that the Corn and Wheat Markets have the potential to climb higher.
USDA - SOYBEAN PRODUCTION IN BRAZIL – CHART BELOW
-Bill
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