Market Analysis with Kristi Van Ahn-Kjeseth
Kristi Van Ahn-Kjeseth discusses the commodity markets.
Paul Yeager The next government report on yield comes next week. This week, the trade has been moving on speculation ahead of the release of that report and whether factors nearing the end of volatility for the week. The nearby wheat contract was flat while December corn gained $0.02. The weather fueled rally ran out of steam in the soybean complex. The November soybean contract sold off $0.06 on the week and December meal, added a dollar 80 per tonne.
Paul Yeager December cotton contracted by 404 per hundredweight over in the dairy parlor. October Class three Milk Futures added $0.06. The livestock market was mixed. October Cattle improved 308. October feeders put on for 50 and the October lean hog contract shed 152. In the currency markets, the US dollar index added 86 ticks. October crude oil improved a dollar 67 per barrel.
Paul Yeager COMEX gold lost 2490 per ounce and the Goldman Sachs Commodity Index increased more than eight points to settle at 606 20. Joining us now is market analyst
Paul Yeager Kristi Van Ahn-Kjeseth. Kristi. Welcome back.
Krisit Van Ahn Kjeseth Hello.
Krisit Van Ahn-Kjeseth It's good to be back.
Paul Yeager So wheat.
Krisit Van Ahn-Kjeseth Yeah, fun.
Paul Yeager Putin says, well, if the West does this certain thing, I'll agree to a deal. The West had already done that thing. Where are we? Where Russia continues to dominate the weather or the wheat narrative. Are we still in that?
Krisit Van Ahn-Kjeseth I don't think so. I mean, I think it grabs some headlines, but for the most part, you look at the wheat market and how far it's scaled back, I think that people are sick of hearing about the whiplash between Russia. You know, you'll hear one story and it might be friendly, but the next day it's a completely different narrative, like you said.
And so then you come back and you take these traders out of the market. And so I really think everyone has stepped away from the market for that reason. They're sick of being all over the place. And that's what we're seeing right now.
Paul Yeager This week, December, Minneapolis was up, Kansas City was trying to rally. So that continue.
Krisit Van Ahn-Kjeseth Yeah, we're trying to round out a bottom the market. You look at the charts and it really honestly looks like you're trying to round out a bottom. When you look at KC Wheat, the biggest thing is we need to get above 750 and trade above it and stick above it. And we have not been able to do that.
We've got above it a couple of different days but have not been able to close above it. If we can get there. It looks really, really friendly that you could see upward of 789, even above $8. 824 842 but we need to get that above 752 just seems like we can't do it.
Paul Yeager So if I'm sitting with on priced wheat, I'm sitting on the acres for a little or the edges a little bit of the field right now.
Krisit Van Ahn-Kjeseth Yeah, I think so. I think the chart is showing you enough action that it really does want to round out a bottom. It's just a matter of traders coming in. And so for the most part, it doesn't look like we want to make new lows, that I'd be patient here.
Paul Yeager CORN There's been some technical side. We've been having this resistance of $5. Do you see that lasting long yet?
Krisit Van Ahn-Kjeseth CORN needs a friend. Soybeans. Try doing it earlier. And I think if you could get that wheat action above 750 for Kansas City wheat, you could get corn to do it. But the first thing you need is, like you said, get above $5. And I think next week for our crop report, that's going to be the deciding factor whether corn can do it or not.
Seasonally, we round out a bottom towards the end of September, so it might take a little bit longer, but I think we might get it.
Paul Yeager We're showing video right now of cornfields in Iowa. You had a chance to drive down from Minnesota. What's since you were last here and made this trip? How is that corn crop changed?
Krisit Van Ahn-Kjeseth Yeah, So I've made the trip a couple of times. So July was here and we got down to Iowa and I was like, This is such a good looking crop. It's phenomenal. I was back about a month later for a family get together and I couldn't believe the crop deterioration along the way. So that was kind of surprising to me.
Now when we're coming down, it's amazing to me how different each field is. There's a lot of fields that look like they can be combined pretty soon, and there's a lot of beans that are still lush green. And so it's kind of weird to see that difference in there. And I think when you look at kind of a field, you've got that sense that it's going to be a difficult harvest for soybeans because you're going to have some ready and some not.
And you can see it throughout the fields.
Paul Yeager Do you subscribe to the theory that this corn market is done moving on weather volatility until we get those first significant round of yield monitors?
Krisit Van Ahn-Kjeseth Yeah, I think so. I even think that for the soybean market, I think the people have moved on from the hot and dry. You know, even if we trend hotter, it's still not going to be that really, really big key, probably. So I think people have moved on to focus on South America, whether for soybeans and for corn.
Krisit Van Ahn-Kjeseth The difficulty is that the heat stress that we saw for those three weeks is probably not going to be seen until you get yield monitors. It's not something that USDA might see in this next report doing boots on the ground. I'm a little bit concerned about that, that it's going to be more of a test weight issue, that it's going to take that harvest activity before you really know what kind of damage that did.
Paul Yeager The test weights, the popular discussion point online that I see this one came in. This is a question that came in from online, from Facebook, actually seems like this time of year, Kristi, is when the corn loads come in. This person, Mike says, I've been hearing some yield estimates under 170. What are your thoughts on pricing new crop corn right now?
Krisit Van Ahn-Kjeseth Yeah, I wouldn't price new crop corn right now. I don't want somebody to take that and say that I'm overly bullish because that's really not the case either. I think corn has got a uphill battle, like you said, got to get through $5. You get above that 507 high that we had from a week or two ago, Then you have some really big resistance levels five, 25, five, 34 and then 550.
Krisit Van Ahn-Kjeseth And so it's going to take a little bit. But at this point I'd be patient seasonally, like I said earlier, end of September. And I think one thing to really focus on right now is if you have a crop that's close to your age or worse, protecting crop insurance price should be on the top of your docket right now is really looking at that for October.
Paul Yeager You've kind of flirted around talking about beans. Yep. You talked about the field progress. Some of them did the volatility. Did you buy the whole sentiment that the volatility is gone now because of the heat, because there's not much more we can do for that crop?
Krisit Van Ahn-Kjeseth Yeah, I think to a degree, but I think more or less you have enough stories right now. In early start for Brazil, some areas that are having some good moisture coming their way. I think you have enough sentiment around the market to tug this market in either direction. And so what we're ending up doing is consolidating in this 1375 to 1385 range, and we're not getting anywhere.
Krisit Van Ahn Kjeseth If we can get above $14, it opens up targets to 1440. I think beans have the most to gain from USDA's crop report next week. I think that's the one where we look at kind of the carry out levels, how small they are. And also we don't have a lot of room to give right now for the yield.
And we've done a pretty decent job of catching up on export sales. I think that's been one of the key things is we've had consistent sales. They have not been anything that's been really attractive, those big ones that you like to see, but they've been consistent.
Paul Yeager Do you see that this market you mentioned a few of those resistance points higher. Do you see that market moving faster than than it has been? Which is hard to say because we realize the weight is down, the crop, the yield is down, those types of things.
Krisit Van Ahn-Kjeseth Yeah, I think if Tuesday comes in here and you have a substantial yield decline of some sort, I think that it's going to be eye opening to the market. I also think because you've been able to get an earlier start in Brazil, that any sort of issue in Brazil is going to come sooner than we're typically used to.
Krisit Van Ahn Kjeseth So by the end of the year, we can know if there's some issues in Brazil and we need them to have a good crop with how tight our crop is here. So I do think you have that ability to really accelerate it. It's just getting those stories to come together.
Paul Yeager I guess I'll ask the same question I did in corn. Do you price any new crop right now?
Krisit Van Ahn-Kjeseth I you know, I think it's a lot different for soybeans. So for me, for soybeans, if you're looking at it, you're saying I don't have the room right now. Basis levels are still attractive. I'm okay selling beans here. And I think, you know, when you're looking at do I store beans or do I store corn, I think the carries are there for you to store corn.
I think the basis is not as great. And I think ethanol profitability is there, that you could really see some good basis levels towards the end of the year for corn. I think farmers are going to be sticklers and not want to get rid of that grain. And so I do think that the opportunities are there for corn, even though the price level it's at.
So if you had to choose, I would be a seller of beans.
Paul Yeager What about in cotton? It seems like there's been a little profit taking this week.
Krisit Van Ahn-Kjeseth Yeah. So cotton, you got that nice run up and now you're looking at kind of the reality behind it. We have 10% behind on export sales, so the business is not there. You're getting good rains for a lot of the areas for cotton and I think a lot of people are just concerned about what China is going to do.
They're such a big importer of our cotton. And last month in August, they imported a lot less than people were expecting. So I think it's a tough one there that you see the writing on the wall that maybe it cannot consistently keep going.
Paul Yeager Are you still bullish in live cattle now?
Krisit Van Ahn-Kjeseth Yes. So live cattle cattle have been steady, Eddie, on tread line. They have not wanted to move. They have been really, honestly boring to watch. And you finally started to see some breakout potential out of them on the charts. So I am I think that you could see that seasonally, you know, you you looked at this market and they were supposed to be dropping starting August 1st.
Both live cattle and feeder cattle, and we didn't see that. And so maybe that seasonal drop was actually the consolidation pattern that we saw on the chart and that you're getting to an opportunity where we can start rallying here for live cattle feeder cattle seasonally. It takes a little bit, but I think that the potential that we've had has been good.
Paul Yeager Do you subscribe to the sentiment that live cattle still tied strongly to the dollar and when the dollar shot up this week and then kind of retreated, that that was going to be the impact on the driver? Not so much a supply story.
Krisit Van Ahn-Kjeseth Yeah, I think that momentarily the dollar can affect the markets, you know, grain markets. I think it has that longer impact when you look at export sales, especially when you're looking at kind of like the wheat complex where it's traded so many different areas. But when you look at the cattle markets, I think that is more driven on exports and domestic usage and tight supplies that I don't think the dollar has enough power to kind of override the fundamental tightness that the market has right now.
Paul Yeager Do you think the feeder you kind of talked a little bit about feeders already, but do you see that as the same story? Are you hearing anything about herds expanding or holding back to expand or it's still.
Krisit Van Ahn Kjeseth It's still tight. And that's what I've heard, is that the pockets are just very, very tight right now. And I think moving forward, it's going to take a long time before you can kind of see that expansion start to happen again. And I think one thing to look at is maybe for feeder cattle, the feed usage, that is such a big aspect to that.
So I think overall you're looking at a pattern that we're still going to have that friendly story behind it. For fundamentals.
Paul Yeager Feed needs are always that issue that comes up when when we see wheat and corn do. Do you think there was a little bit of buying? Because we did see a tiny rally at the beginning of the week coming off the holiday.
Krisit Van Ahn-Kjeseth Yes. So we we moved on some feed needs. So it's something we're looking at seasonally. I hate to keep going back to it, but October, you know, you have this crop insurance price for corn. And I think it's just something you really got to focus on that if the profitability is there to be able to protect that. So we did move on some of that just because of where we're at.
And corn feels kind of comfortable at this level. We know Tuesday can bring some wild cards, but even if you broke the corn market, the support is for 52, for 60 on the charts. And so that's not that much lower that we took that step to make sure we're protecting some of those.
Paul Yeager Dollar impacting the hog market, too.
Krisit Van Ahn-Kjeseth I think you can see that to a degree. I think right now one of the biggest things is hog liquidation. We're seeing that kind of across the board. You're seeing some plant or some farms closed in Missouri, some Prop 12 liquidation. So I'm not so sure if it's necessarily the dollar, but I think liquidation is the biggest factor here, is that for a while it looked like maybe futures were going to go meat, cash, but it ended up cash coming down to meat futures.
Paul Yeager Do you see that trend continuing for a while?
Krisit Van Ahn-Kjeseth No, I actually think you could you could dig out of this hole once we get past liquidation. I think when you talk about domestic usage, you look at the difference in price between beef and pork. I think that you're still going to see that demand really stay strong for domestic usage. And I think also our export sales on pork, just the way everything's panning out I think could stay strong as well, which.
Paul Yeager You are most bullish on. Are those three livestock, cattle feeders or the hogs. In the next three months, I'll give you a window.
Krisit Van Ahn-Kjeseth Okay. Three months. I like the way live cattle look on a chart right now.
Paul Yeager Very good. And I like the way this worked out. Kristi
Krisit Van Ahn-Kjeseth Great.
Paul Yeager Thank you. Good to see you again.
Krisit Van Ahn-Kjeseth Yes, you too.
Paul Yeager All right. We're going to hold tight and we're going to pause this analysis and continue our discussion about these markets in our market Plus segment, you can find both analysis and plus on our website of market to market dot o-r-g. We do enjoy hearing from you. And here is how to do that. Send us an email to market to market at Iowa pbs.org. That inbox is available around the clock. Next week we are going to look at the land owner pushback along proposed pipeline routes. Thank you so very much for watching. Have a great week.
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