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Soybean Prices Are 31¼¢ Off Their Monthly Lows

No frost in sight, pressuring prices going forward.

Soybeans were hit with a round of end-of-week profit taking today, as the market was under pressure all session.

For the week, we ended 6¾ cents higher. 

Not a bad week for market bulls when you consider how the USDA threw a bearish yield number at us when it released its production updates on Tuesday. Today’s settlement was 31¼¢ off the lows that were scored right after the numbers were released.

Another 132K of beans were sold to China this morning as the world’s biggest bean importer continues to add coverage. This is good to see because export sales to-date are running quite a bit behind last year’s pace. We have sold 624 million bushels of beans for the current marketing year. Last year, we sold 865 million bushels by this time.

Today’s NOPA crush number was considered friendly, as it came in at 142.4 vs the average guess of 137.5. Oil stocks were 1.417 vs. the average trade guess of 1.396. With the 142.424 plugged in for August NOPA, and Allendale’s expectation for 9.1 from the non-NOPA plants, we see the whole year’s domestic crush at 1.905 billion bushels. That is over USDA’s 1.895 estimate on Tuesday.

Weather is getting a mixed spin, as there is no early killing frost on the maps at this time, giving the late-season beans some extra time to mature. If anything, the heat and dryness we are currently seeing in the Midwest is taking some of the top end off the crop. 

Too much rain in Argentina and not enough in Brazil is slowing planting of the spring crop in South America, providing some support to the market. With harvest picking up steam over the next few weeks, the trade’s attention will shift to actual harvest results, which should help determine how big the crop really is. We look for a choppy sideways trade action until confidence in the actual crop size grows.

Support should be found at the $9.60 down to $9.43 level with resistance coming in at $9.77½, $9.80, and then at the $9.93 level. Right after Tuesday’s bearish report was released, the bean market broke hard but found buyers 17¢ higher than the August lows despite the fact the crop was .5 bushel higher than the August survey results.  We would argue that the fall low is behind us unless the report day low of $937½ is taken out…Jim McCormick

 
Lean Hog Commentary

 

USDA’s 1 p.m. Estimated Slaughter report did not bring much of a surprise. We posted a big 2.432 million head kill week, which confirms the normal run-up in supplies into November. This number was just 1,000 head from our morning estimate. For the general hog trade, there’s no doubt the realization that we aren’t going to get out of this year’s new record production will be seen as slightly disappointing. USDA’s estimate was 2.7% over last year. We see no reason to expect USDA’s 5.7% year-over-year pork production estimate at this time.

We do have to point out that the transition in weights, from 0.5% under last year to now 0.5% over last year won’t be seen as positive. It was just a few weeks ago we were wondering where the hogs were. They are here now.

October lean hog futures fell 1.07 this week (after today’s rally). The December contract was down 37¢. Cash hogs, via the IA/MN, fell 7.32 this week. That includes the 2.55 decline posted today on the morning hog report.

Producers are now marketing hogs that are in the red. This should last for several weeks ahead. Lower grain prices are good for the producer, but this hog price issue is a larger concern. For 2017 all put together, producers will still pencil out solidly in the black. For the next few weeks, it may be uncomfortable.

Our December expiration price is $56. Hold all hedges until November. Rich Nelson

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Rich Nelson
Allendale Inc.
815-578-6161
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