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Corn Market Trading Range Narrows

Two weeks left before Thanksgiving means big pork numbers ahead.

After seeing how corn traded today it is becoming clear that the trading range in December is getting even smaller than what it has been.

We are still seeing major resistance on bounces like we found yesterday as well as major support on setbacks as seen today but the levels where that support/resistance comes in is getting smaller. At one point today, there were 4500 contracts bid at 347 1/2 in corn which is now even larger support found at a higher level then just a couple days ago.

Looking forward to next week, we will likely see analysts raise their corn yield number due to the fact this report has a history of raising yield 72% of the time in November when it is raised in October.

Traders might not choose to pre trade this report however as many of them are already heavily invested in trades that benefit most from sideways trade. For this reason we might see corn continue in the current range even if analysts look for a slightly bearish report. Short term let's look for more sideways trade waiting to see if the report causes enough news for a breakout. Longer term if this week's report doesn't cause a breakout this sideways move may continue until at least November 24th when the December corn options expire.

Bulls

  • Major support of 4500 contracts was seen at today's low of 347 1/2 which is higher than the low posted just 2 days ago
  • Just ahead of a USDA report bulls might want to aim a bit lower with buying unless the same major support is seen next week as well

Bears

  • Sellers had to be quick with their short term trade selling at 352 when 355 would have worked on the last bounce
  • Bears should be cautious assuming this market will be pre sold ahead of next week's report, trade is already heavily invested in this market moving sideways

 

Lean Hog Commentary

For the week, the December contract closed only moderately higher. The 2018 contracts continued their push higher and posted good gains for all contracts. In the short term this December has the tough job of guessing how low cash hog prices will fall by December 14. If the seasonals will work in the weeks ahead we can expect a sharp fall in prices into mid/later November then the winter rebound into December 14. Allendale does officially suggest this rally is over for cash hogs. Prices fell 1.50 last week and are down 1.27 for this week through USDA's Friday morning report.

USDA's Friday afternoon report suggested 2.453 million head for the week's kill. That would be just a few thousand under our 2.464 morning estimate. There are two weeks left before Thanksgiving week so expect some big numbers ahead. We are looking for a +2.550 kill week during this time. That is not too bad though. It is a bit under our original expectation of 2.6. Numbers have come in as expected over the previous two months. The trade expects lighter numbers, compared with last year, in the months ahead. Again, we will still have larger than last year numbers this winter and all of next year. It is the reduction in the size of the growth we are discussing.

The ADP and Consumer Confidence data earlier this week were supportive. Today's monthly employment report from the government was lower than the trade guess but still a respectable number itself.

As of today, we have a second attempt to sell this market on the books. December won't hit $56 but should see the $58 - $62 range. RN

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