Bean market trades rumor
It was rumor day in the beans. Beans found strength as the market started to talk about Brazil halting exports until August. This is just a rumor and there has been no confirmation that this event has happened. Beans ended 8 3/4 higher for the week but finished the day 28 1/2 higher in July. The charts are friendly and with this news today the bulls jumped back in on the long side. The weekly chart posted a strong week and could see us retest the recent highs. This rumor will be talked about again on Monday. The other bullish news for beans continues to be exports. China has been a big buyer of our beans and they continue to buy from us. This should continue until we see South American prices get cheaper than ours. We are going to stand aside right now and wait to see how Monday plays out before taking a direction. Sunday night trade will be volatile.
Argentina: This week the Agriculture Ministry lowered its view of corn production from 21.2 million tonnes down to 20.3. Soybean production was lowered from 44.0 to 42.9 million tonnes. USDA’s latest is 21.5 and 45 mt respectively. There is still more guessing left in the South American production game.
(2/23) Sold July at 1415, risk 1442 filled 4/20 for -$1,350.
Closing Cattle Commentary
Cattle on Feed held mixed news. Placements of new calves and feeders into feedlots last month was 6% smaller than a year ago. That was not as exciting as 8% lower expectations. For the short term this may be a little disappointing. For the big picture it is great news. For months and months Placements had been running close to last year levels. This new number, for March, may indicate we are ready to begin a few months of below last year numbers. This is bullish for the Q4 supply outlook. The real story for today may not have been Cattle on Feed. The Cold Storage report, also out at 2 pm, may have been something of concern. Beef stocks grew a very large 37 million lbs. from the previous month. This represents a clear problem as it indicates US consumers had a big issue with LFTB. In the short term we may see cattle futures down 20 cents on Monday. In the big picture, eventually consumers will return to ground beef and live cattle supplies will dry up. We see cattle prices rebounding for three weeks then post a moderate downtrend again into summer. Our $130 target for December futures is still in the forecast.
(4/13) Sold October 120 live cattle put 2.35, risk to 4.12, objective 0. Closed 2.65.
(4/18) Bought August cattle 119.55. Sold June 116 put 1.50, risk 2.50 from entry, objective 4.75 from entry. Current closes of 118.90 and 1.55 = -0.70 from entry.