Market Analysis with Ted Seifried
Market Analysis with Ted Seifried
Paul Yeager Friday's quarterly stocks report failed to add any positive news to an already challenging week as the government raised piles of wheat and beans and also government crop surveyors started as the shutdown loomed for the week, the nearby wheat contract dropped $0.38 while December corn lost a penny.
The soybean trade looked at longer moving averages for guidance. The November contract fell $0.21 and December meals shed 460 per ton. December cotton expanded by $1.28 per 100 weight. Over in the dairy parlor October Class three milk futures decreased a quarter. The livestock market was lower. December cattle lost. 342 November feeders cut 863 and the December hog contract declined $0.40.
In the currency markets, the US dollar index added 53 ticks. November crude put on $0.47 per barrel. COMEX gold lost 7960 per ounce and the Goldman Sachs Commodity Index shed almost three points to settle at 608 70. Joining us now, regular market analyst Ted Seifried. Burning a hole out of your smile to get through this week, Ted.
Ted Seifried I know, right?
Paul Yeager I mean, this wheat market alone. Yeah. Let's see, K.C., hard read looking at old lows spring, looking at two year lows. Where's the silver lining there?
Ted Seifried Who for? I don't know. You know, and actually, the week. The week for wheat. It wasn't all that bad until Friday. Right. And you have a production report that comes in 80 million bushels higher than what expectations were and what last month's USDA numbers were. That really threw a wrench into the market and really did some tactical damage. So now you you hope those those lows hold, but they are going to be that target. That's that's the next hope that we have for for wheat.
Paul Yeager Hope is only one thing. So we're looking at almost 7% on the December contract. So quickly on wheat. I know you're going to have to you get asked this a lot on Twitter. Is this the bottom?
Ted Seifried Yeah, yeah, yeah. I do get asked that a lot. So unfortunately, I don't think so. Okay. And I think that really ties into what we're going to talk about in the road crops, too. We have macroeconomic things that are afoot and that I think is going to really impact seasonality. It's going to impact, you know, technicals and charts that we think, hey, these are levels that should hold. I think they skew fundamentals or a little bit or our perception of fundamentals a little bit. So unfortunately, I have to say no.
Paul Yeager CORN Not much better. Right. But only a not even a penny. So even on the week, it was quite a week started out with some incredible news that Mexico bought a whole bunch of grain and then it didn't get any better.
Ted Seifried Actually, you know, all the way up until Friday morning, Corn had was having a good week. We were up, I think, 11 and a half cents for the week or so. And then, yes, we gave it all back on Friday based on the report, based on the massive risk off situation that you had really commodity wide stocks as well. I you know, I'm going to say there are some things that I think are turning a little bit more positive for corn. That is, you know, that big export sales to Mexico the last couple of weeks of weekly export sales have been fairly solid. And we know next week's going to be really good because of the Mexico sale that we had on Monday. Ethanol's hanging in there pretty well. It would be great if we could get unleaded gasoline consumption to start moving higher. It's still languishing around end of pandemic levels. So that's the one drawback for for ethanol. But margins are good. So we're going to continue to push ethanol. So that's that's good. The problem, though, is we're still looking at a potential two plus billion bushel carryover, even with quarterly grain stocks. Numbers coming in a little bit below expectations in that quarterly grain stocks number. While that was lower than expectations and stock's year over year are down 1%, the on farm stocks are up 19%. So when we talk about looking for harvest lows, that means that most of the cash pressure, the cash sales that are going to happen leading up to and during harvest are behind us. You cannot comfortably say that right now. There's going to have to be a bunch of old crop that has to move in order to make room for new crop. And I've got a fair amount of guys that are coming back and telling me that they're finding more bushels out there than what they were expecting. So there's unaccounted for bushels that are now going to be on the sales sheet. So yeah, harvest low is in corn. It's we want it to seasonally be now that this should be now but just it doesn't I don't think the fundamentals are there for it and again the broader market picture I think is a big problem for for corn for for commodities as a whole. And I think it takes away some of the seasonality that we would expect for corn.
Paul Yeager We need those names, the numbers of each individual customer that says more and where they're at. Okay. Corn, One last quick thing on it then. If if the low is not there, if there is more grain out there and the report validated the thoughts of there's a whole lot of corn still on the farm. So my question to you is, do you take a loss as much as you can and sell off the combine right now?
Ted Seifried So, you know, the good thing is that we have crop insurance and the levels were set at decent levels. I mean, look, none of this is fun, right? This was the most expensive corn crop we've ever planted. And if you had not made sales throughout the year when you had chances to, this is a tough decision to make. And I understand how hard it was to make those sales when we had those two spikes during the growing season, because then you're sitting there thinking, well, it might not ever rain again, we might not have a corn crop, corn could be going to $8. So it was difficult to pull the trigger. And if you're sitting there now, I think what you have to do is make the sales take the crop insurance, but you almost have to protect the crop insurance at this point by, say, owning calls.
Paul Yeager And looking at technicals and soybeans, looking at that 100 and the 200 day moving average, is it telling you the low is in or it's time to make a sale before it turns lower?
Ted Seifried I hate the look of the soybean chart right now. It looks really toppy from a long term perspective. We broke out. We broke out below that that 1280 level in November beans on Friday. That is a really bad look that looks like the start of a new leg lower. I think the immediate target is 1257, but 1180 is kind of the projection at the moment. So I know I'm not the bearer of good news here, Paul, but Friday was a was a really not good day for for really everything from a chart perspective, a bad day.
Paul Yeager So do you I guess same question as it was in corn. Do you think this will force some people to sell before it gets worse?
Ted Seifried I think for soybeans, you really have to do that. You know, look, corn has been just hovering right above and consolidating sideways, right above the lows for the month and a half. Right. So the soybeans are well off the lows. You know, we had 1120 before we got the acreage report back in May. So we're 13 while we just got below 1280. Right. So, I mean, we were at 13 for a while. We're not far off. 13. If you go further out in time, you are still seeing some contracts at 13. These are still relatively decent prices in soybeans. I think you really do have to take advantage of that.
Paul Yeager Okay. We're showing that March contract and that's exactly what you're talking about. 1310. I need to get to livestock because that, too, was not real pretty. You mentioned the macro markets, outside markets on cattle. Economically, those are always tied together. Do you see that that is more independent, the cattle market's topped, or is that influenced by outside markets right now?
Ted Seifried So you have a lot of speculators that have been trading in the cattle market. And when you have a massive risk off events, they're going to run for the doors. In the meantime, it does chart damage that gives them more reason to sell. And you've got a lot of fear and concern about what's going to happen with government shutdown, but also the economy going into fall and winter. Some are suggesting this could be a really this could be the recession that we've been talking about for years that hasn't actually happened. So there's a lot of fear surrounding the cattle market, in particular. I don't know. The supply side fundamentals are still relatively are pretty bullish. I think it's just a matter of if we do go into this economic slowdown, we're not going to be able to support paying for high priced beef.
Paul Yeager Right. And so then the feeder volatility, Yeah. Is there to given it's shown some volatility. However, can you find some hope that we're since we're short animals that that might stave off some losses.
Ted Seifried The biggest hope in the feeder cattle or cattle is that we've we've done enough of the work already. Right. And you have the potential for lower corn prices coming. So those two things I think could be fairly supportive. Now that we've broken 15 bucks off the highs or so. The problem is, is that when you're looking at feeder cattle, you're looking at further on down the line in our recessionary fears are further down the line. So that's why it hit feeder cattle first and the hardest. But at this point, yes, we've gotten very oversold. You'd hope that we're close to finding a bottom, at least trying to consolidate and maybe bounce back a little bit.
Paul Yeager Pigs, hogs and pigs report on Thursday and the wildness continues.
Ted Seifried Yeah, yeah, yeah. The California deal is just lingering and that's just a bad deal. The thing the good thing about hogs, though, is that if we are slipping into this recession that we were so worried about and have been for last quarter, look how bad the stock market has taken a hit just since the beginning of August. I it's not good. And the dollar is just flying high. The winner here might be the hogs, because if we are going to the grocer and saying, you know, hey, we really need to cut back a little bit, let's not spend on the T-Bone, let's get some pork chops instead as a substitute substitute protein, pork could be the winner here. So I'm I think a lot of the negative news for hogs with California, everything like that has been factored in. I want to be friendly hogs, especially if we are going to be so negative on everything else. I just don't like the strength in the back months because I want to I want to own further out in time, but I'm owning it higher prices and that makes me nervous compared to what what we're trading on the front month. So, yeah, again, I want to be optimistic for hogs in a recession, if that's where we're headed.
Paul Yeager We tried to smile as best we could, but I know, I know we're going to answer some more questions here at Marketplace and maybe we'll find something positive there. All right. Thanks, Ted.
Ted Seifried Yep. Thanks, Paul.
Paul Yeager Hold on there. We are going to pause this analysis, continue our discussion about these markets at our Market Plus segment. You can find both analysis and plus on our website of market to market. Org Our portability keeps you in the loop and us in your cab truck or ears this harvest season. Follow our YouTube page for full shows Marketplace and the MTO and podcast hits. Subscribe at YouTube.com Slash Market to Market Next week. We look at farm safety when entering the bin. Thank you so much for watching. Have a great week.
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