Soybean Demand, Corn Prices and the Cattle Rally With Kristi Van Ahn

[YEAGER] This week's WASDE report cut, yield and ending Stocks on corn. Initial reaction by the market was a move higher than eventually gave way to pressure on the grains. Before Friday rebound for the trading week ending November 13th. The nearby wheat contract added $0.03 and December corn gained a nickel. Tighter stocks in the soy complex led to a two week high. The January soybean contract improved $0.37 and December meal expanded by $9.70 per ton. December cotton lost $0.23 per hundredweight. December class three milk futures were up $0.48. The livestock complex was higher. December cattle gained 6.58. January feeders put on 1702 and the December lean hog contract strengthened 2.57. In the currency markets, the U.S. Dollar Index added 115 ticks. December crude oil dropped 208 per barrel. Comex gold fell 1.99 50 per ounce, and the Goldman Sachs Commodity Index shrank by almost ten points to settle at 600 8988. Here now to lend us her insight on these and other trends is regular market analyst Kristi Van Ahn. Hello, Kristi. 

[KRISTI VAN AHN] Hi there. 

[YEAGER] I don't normally mention the dollar in the beginning of the program, but a 19 month high. Yes. Warranted that. What's the headwinds for commodities with that rise? 

[VAN AHN] Yeah, absolutely. I think it's something that needs to be talked about right now. I do think it's having an impact on some exports. Not soybeans. Right. I think soybeans are extremely strong right now. Eventually it could have that impact. But I think you're meeting some obligations. But I do think that that dollar is detrimental right now to both corn and wheat. And really when you're trying to round out a bottom in corn and you're searching for a bottom in wheat, that dollar is kind of that elephant in the room and nagging on the markets. And I think it's slowly kind of gotten to where it's gotten and quietly gotten to it. But now I think everyone's focused on that. And a lot of talk on inflation lately. We had CPI data come in a little bit hot, and I think that paired with the US dollar you're starting to talk about you know is it one interest rate hike. Is it multiple interest rate hikes now? And we have to remember a fight on inflation is not generally a good thing for commodity prices. 

[YEAGER] And that fight has been going on. I think the number in the script was since 2022 the highest number on one of those inflation gauges, which means we've seen this story before. But is there any difference between the 2022 inflation discussion and this one? 

[VAN AHN] I not really I think you still have those same conversations. Obviously, we know that there's some bigger roles being played, some wars causing, you know, energy prices that was talked about highly throughout the midterms. So that was talked about. That's well aware of those situations. And so, I do think that overall, when you look at the big picture, it's still a fight on inflation. And it's still going to be one of those things that kind of weighs on the market and keeps it in check. Overall. 

[YEAGER] We now get two commitment of traders reports. So, we get a little bit of a more mid sense of where people are at. Are they going long in wheat? Are you, do you see that? And if that is happening is that a good thing. 

[VAN AHN] They have not flipped like last Friday's report. They sold pretty much everything commodities, energies, metals, everything except for rice. There were small buyers of rice. And so, I'd like to see them flip. I mean, when you look at the big picture, they've sold over 400,000 contracts of corn. You have to think of them selling that. And you have farmers selling during harvest as well. It was like the perfect storm. So, there's those situations. We do need to see them stop being sellers of these markets to find a bottom. I think that's one of the key situations we need. And they don't really like to be buyers of wheat as the tough thing. They usually use wheat as a short end of a spread. And to be honest, what is going to make them be a buyer of wheat at this point? You look at kind of conditions in winter wheat country, they've really improved conditions there. They've gotten those timely rains. We haven't really been able to pick up demand. And I thought, you know, a couple of weeks ago, China was sniffing around for some wheat. I thought that would have played a much bigger role in this market. But it seems right now this market is dead set on not being able to do much with it. Until we got this was started to build off of that. 

[YEAGER] Easiest move is lower. 

[VAN AHN] Yes. Right now it is. 

[YEAGER] All right in corn you have bullish report to start kind of expected on the yield. What was your take on the stocks and the carryout? 

[VAN AHN] Yeah I thought the report was friendly. Both corn and soybeans really nothing there for wheat. I think if you break it down we can talk about corn first. You were expecting a yield decrease. You saw that a little bit more than you actually were anticipating. I think that's a general sentiment around the market. It'd be really hard to find a lot of people that have better yields than they did last year for corn, except southern Minnesota, which they desperately needed a good year after some rough years. So, you've heard good yields out of there. But overall, I just think in general, you look at kind of what USDA did for corn. They lowered yield, but they also lowered feed use and exports, which exports were justified. You know, we are behind pace where we need to be. And so that was justified. But I do think that the sustained trade really at a lower price for corn, will drum up that demand, that it's not such a bad thing that we're at these suppressed prices. Let's build the demand, let's get it booked, and then we can come in here down the road. And if they've already decreased yields, if you can bring those back up now, you're like 1516. If you can get there and you know, feed use has been a thorn in my side for at least over a year. If you've talked to me, you know that feed use has just been so annoying to me. And now you're coming in here and actually giving the cattle back across the border to the U.S. And now you're like, actually feed use is going to be lower. So, I find that dynamic really weird and possibly that they'll come back and change that. 

[YEAGER] Well, you already kind of answered Robby in Kansas question, but let's put it up here anyway. Robby is asking, is corn bottomed out yet? And is this a good level to buy corn for feed needs? 

[VAN AHN] Yeah. So typically, when I'm coming on this show, I think about what questions might be asked. And this is definitely a question that I feel like was going to be asked about rounding out a bottom in corn. And I do think you are desperately trying to do that. You have not completely done that on the charts yet. I'd like to see some confirmation there, but I do think this market is trying. So many of the technical indicators are starting to try and flip. You push this market so low, you have managed money that was aggressive sellers. You should be past kind of the harvest pressure. Usually you have your set harvest, obviously, you know, driving down here, I saw a couple fields. Yet we know that Iowa's behind pace. And then you have your like ten days of some delayed pricing that you have that window. So, we should be getting to the end of that. So, I do feel like over the next couple, like I would say week, week and a half, we're really desperately trying to round out that bottom. And I think it's taken those first action steps to feeling good about it. 

[YEAGER] You mentioned earlier about China and the dollar and it not impacting soybeans. China comes in this week. Maybe book some sales. Maybe is the is the thought. We've always seen this story before. Does the market buy that soybean is serious about making this purchase? 

[VAN AHN] Yeah. So, it does affect the US dollar definitely affects soybeans. Don't get me wrong. I just think that right now China is committed to fulfilling those purchases, which if you ask me, six months ago, I had very little faith that they were going to commit to this. And they seem to be doing just that. And so, I do think that demand is there. We had it again here this morning to have those private sales. And honestly, I think when you look at soybeans, soybeans have progressively picked up demand at these lower prices. I mean, we were consistent on private sales. And not only that, you still have crush. That's extremely strong. So, I think that soybeans have the writing on the wall to have a friendly story, a very friendly story. If they want to. My biggest concern is that that will be materialized when you have a South America crop. Okay. And then what do you do? You have a washout that the US is saying, hey, things are a little tight here, but the big picture is okay because of South America. So, I'm hoping we materialize that sooner rather than later. 

[YEAGER] Which means we have what, 1 to 2 months here before we get in? Because I did see that there were some comments made last week by Ted that talked about Matto Grasso planting. Then I've got a Brazilian claim it's going to be a Brazilian farmer saying, no, we actually are at a great pace. We are ahead. How much can the U.S. Farmer, the American farmer right now, sit here and look at that South America weather, knowing they only have six weeks. They really can't take the holiday off right now with marketing. What's the sign for them to make a move? There's a question there finally. 

[VAN AHN] Yeah, absolutely. So, I think what's great is that the technicals did flip for soybeans. They look great. They really have started to open up some price counts after today's action to, you know, 12681298 those are probably some targets I'm looking at for soybeans right now. But you are on a tight window. And I also think that everything we have done in the US eventually materializes itself in Brazil. And so, the rhetoric around planting used to always be, you know, get the corn in right away, get it planted early, and then work on soybeans. I feel like over the last few years, you've started to say, I can see the payoff. I'm putting beans in early. So now you have Brazil saying I have really good conditions. It is a little bit early, but I have those conditions. Let's see how it works out. Obviously, some different climates between different areas, but I do think that you are seeing that aggressive, aggressive pace of planting there because the conditions are favorable. A month ago, a month and a half ago, all you talked about was super El Nino and how it was going to ruin the crop in South America. That is still a possibility, but now you're getting them in okay conditions that we know. See, genetics can play themselves out and eventually give you some strength. So, I do think you have a tight window. There should be no changes in the December WASDE. Typically, they just kind of leave everything as is. So, then you're looking at January as kind of hopefully that last hurrah to be able to get some marketing done. And I do think that time frame is also when you could be looking at some basis opportunities for both corn and soybeans as well. 

[YEAGER] Where do covered feeders a little bit, but let's go to cattle because when we show that chart here in a few seconds, we are going to see some massive moves here all of a sudden. Yes. What's going on? 

[VAN AHN] Yeah. You've had insane volatility. When you look at the cattle markets. And so, I think what you're seeing right now is that doom and gloom. We completely washed out. And you can also go back to manage money. I mean your record short holdings in hogs. You've been selling your cattle markets. You've been selling your grain markets. They have not stood a chance against managed money, a lot of these commodities. But now we are able to round out a bottom. And we're approaching this 50% 50% retracement for live cattle. We got through that for feeder cattle. And now I'm looking at the situation in live cattle. And to me, when you look at a chart, this is a make or break area. If you fail at this area, if you fail at 50% retracement on live cattle, I am concerned what we could see moving forward seasonally, you should find some support through Christmas. So, if we can just get through this resistance point on the chart, I will feel very good. Feeders were able to do that. 

[YEAGER] Well, I want to interrupt though about the technical side. Let's look at the fundamental story that has developed in live cattle. You talk about curves and moves. The new world Screwworm is not going in the direction of containment. And so, is that a factor in this? 

[VAN AHN] You know, I always find it so funny that something can be such a big deal. And then you do something about it for so long, and then all of a sudden you just refuse to even talk about it. And that's what happened, right? All of a sudden you have all these cases, they're tracking them, they're posting them, but it's like, it's all right. We're just going to push it out and not pay attention to it. And I feel like that's what's happening right now. But there's a big difference between what is more important. Is it the cases that are rising, or is it the fact that we are letting in volumes of like 60% of normal volumes across the border now? So, what is the bigger one there? And I think the market's trying to decide on that. 

[YEAGER] Anything else on feeders since I made you answered way out of order. 

[VAN AHN] Yeah. I just think, you know, you got through a key resistance point on feeders. I do think it opens up some possibilities to the top side to the recent highs, maybe five bucks short of that. However, I am friendly-ish on corn and friendly corn usually doesn't go friendly feeders. 

[YEAGER] And hogs have had. I can't believe it. An actual up week. Is this the start of something big or just something? 

[VAN AHN] You know, I think you could just put wheat and hogs together and cry in a corner over them. There is nothing good to say about them right now. Hogs. When you talk about them, record short holding on managed money exports have been strong, but our domestic demand on hogs has been horrible. And so, I'm hoping we can start to pick that up. We are probably a couple of weeks away from being current, and I'm thinking as soon as we can get current, we could get managed money back in. We could get buyers back in. But it has been an ugly ride for anyone that has hogs right now. 

[YEAGER] All right. Good. Good job there. I got a couple of things I'm going to pin you down here on Plus we're going to play a little either or game. Okay. We'll see how that goes. Christy great to see you. Thank you so much. Thank you. Christy Von on everybody. And you've been watching our market analysis. If you're watching online or on the PBS app, we are going to stay here, continue this discussion in market. Plus, our online only segment. Find it wherever you get your podcasts or at Markettomarket.org where you can watch it, listen or read it. We also have a new feature on our YouTube channel. That's the playlist that involves many of the topics that we cover on this program. Check out the stories grouped on technology, crops, trade and policy, just to name a few. Check us out at youtube.com/MarkettoMarket. Next week, one family's effort to renovate the land and keep the cranberry harvest coming. Thank you so much for watching. Have a great week. 

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