Market Analysis with Matt Bennett

Paul Yeager:  A lower U.S. dollar and some South American weather played out in the trade. For the week. The nearby wheat contract lost $0.03, while December corn cut $0.04. Global factors of weather in Brazil and buying from China supported the soybean complex. The January contract added $0.32 and December meal lost $0.30 per ton. December cotton shrank by $4.76 per hundred weight.

Over in the dairy parlor, December class three, milk futures decreased $0.02. The livestock market was higher. December cattle added 165. January re feeders put on 405 and the December lean hog contract increased 127. In the currency markets, the US dollar index fell 148 ticks. December crude sold off 416 per barrel. COMEX gold dropped 1490 per ounce and the Goldman Sachs Commodity Index decreased more than 11 points to settle at 581.50.

Joining us now is regular market analyst Matthew Bennett. Hi, sir.

Matthew Bennett:  Hello.

Paul Yeager:  So wheat.

Matthew Bennett:  Yeah.

Paul Yeager:  When we look at this market, it has been on this downward scale, the woes that we hear about Kansas City. Then the others kind of caught the Kansas City cough, whatever you want to say. The question, though, of the week is, did we finally set a bottom?

Matthew Bennett:  You know, it sure looks like we may have. I mean, really, wheat's more of a follower right now. It's not the time of year you typically say wheat is going to lead us in or out of anything. Now, over the last year or two, of course, we've had all this Black Sea stuff going on. At times Ukraine says, hey, we're going to shut off the corridor.

Then Russia says, well, we're going to put duties on, take duties off if we don't have any major news. And let's face it, some of the news, some of the even bombings at times over the last three or four months haven't produced the effect that they used to produce. Right now, it just seems like wheat’s following along. But yes, maybe we did score a little bit of a low for the time being.

I'm not super friendly. I'm not too bearish down here either, though.

Paul Yeager:  So I'm reading that as a neutral.

Matthew Bennett:  I'm neutral. I'm neutral to friendly, but again, it's going to follow along. If you have some of the stuff going on that we're going to talk about, for instance, in the bond market and corn market, you know, and you get some support, I think that wheat has the ability to go ahead and rally. Fundamentally, it's not in bad shape.

Stocks are tighter than what historically they would ever have been. But bottom line for me, I don't have a story. There is just very quiet on the news front.

Paul Yeager:  The other question then, when you move into corn is it has been quiet on the news front. There's always that discussion that a bull market needs to be fed. Hadn't been much to eat there. What is and again, it's the same question. Have we hit the bottom there?

Matthew Bennett:  Well, corn lost ground on the weak, you know, And if it would have been for Friday, it had been ugly, quite frankly. Yeah. And if it wouldn't have been for soybeans, I'm not so sure that corn would have had the kind of day it did Friday. But, you know, you look at this corn market and I've got to think that some of the steady dose of info over the last several days, Eastern corn belt sure sounds to me like yields are pretty darn good.

I think that you're seeing some of the later yields, maybe a little more impressive than what people thought they were going to be. The demand for it's not bad. I mean, ethanol numbers this week were awfully good. You look at exports, they haven't been abysmal by any means. We've gotten some decent exports. But overall on corn, in my opinion, I think that you're still in kind of a path of least resistance.

Seems lower right now. Are you going to go ahead and get under that 4.67 and three quarters and maybe go towards a 4.50 type trade? You know, before Friday's trade, I could have seen that potentially happening. But at this point, I've got to think that maybe we found ourselves a little bit, sells a little support.

Paul Yeager:  However, I'm not trying to put water on a market, but things can go quickly. Let's look at corn this week. Highest close for December corn this month was 5.05 on 10/19 of the lowest close was earlier in the week at 4.78. So things can erode... what would make the bottom fall out of this market?

Matthew Bennett:  You know I think that if you come in here on Sunday, Monday, and they say, you know what, we're going to get broad based rain through the areas that need it in Brazil. And quite frankly, some of these beans have been planted for a while and they haven't even come up where they have really uneven stands. In that particular situation, though, if the weather quits being a huge feared, hey, we're actually going to get these beans planted in reasonable time, going to get the safrinha crop planted in decent time. If all those things come to pass, you've got to think the bean market's going to take it on the chin.

In my opinion, corn could really struggle in that particular situation. This week, at times I thought corn was weaker than even what I thought it might be. I haven't been a bull by any means. I felt like you look at U.S. stocks, you look at global stocks, Paul, there's just not a bullish story there. You're looking at going from one, three, five, two, two, one or more.

You know, demand could even be worse than the USDA is particularly projecting right now. So you have to be cautious is to get to bulled up there.

Paul Yeager:  Well, that's the 23 we're about to go into 24. But let's look a little farther down. Mike in Iowa, had a question for you, Matthew. He says, what's it going to take to get this corn out of the trading range? But then let's extend it here. What's your target for December 24?

Matthew Bennett:   Target for December 24? So to be honest, Paul, we've been fairly aggressive already on 24. And you kind of know where I come from on some of this. If I'm buying fertilizer, personally, I like to take a look at, you know, how many bushels it take to pay for that fertilizer, because the folks that got themselves in trouble in the 23 crop bought a lot of really expensive fertilizer a year ago now. You know, and they didn't sell enough corn and I'm not trying to be a Monday morning quarterback or anything.

I'm just saying that, you know, you open yourself up for disaster there. And so obviously fertilizer continues to creep a little bit higher in here. We have to be cautious. But the ratio with fertilizers, cheap is what it was, let's say farm progress show time and everyone is prepaying versus $5 plus corn. Actually, that was a pretty good ratio.

You can make some money there. And so what am I targets? I think if you if you get this these corn again in this 525.25, 5.30 if you get it would be fantastic. But remember, 5.30 for a lot of folks is $5 corn in the United States. There's going to be a ton of people wanting to sell in there.

So if you've got cheap fertilizer bought, right now is a pretty good time to sell some corn.

Paul Yeager:  Is it a good time to sell any beans?

Matthew Bennett:  You know, after the rally that we've seen? Yes. You know, I had a guy call me actually on on Friday before I came on the show and just said, you know, what, should I sell some beans? I said, how much if they if they come up here in the last three or four weeks? He said, well, last time I really thought about selling beans.

They were $0.60 lower than today. And he said, But what if they go on up? And I said, Who cares? $0.60 higher than what they were before is still a better sale. So, you know, I think in the short run I could see some support for corn, Paul, but in the long run, when we look at 24, you got to be really cautious.

Whenever you're looking at world and U.S. stocks growing to the point that they're growing.

Paul Yeager:  And also where the crop is growing. Right, Because it's kind of like what you mentioned with corn in Brazil, but also in China. If they're going to buy, not buy, they're in that game. So do soybeans continued in your eyes and 24 still have a big global story.

Matthew Bennett:  The thing with beans is that you've got a really diverging story between the U.S. and world. You know, U.S. stocks are going to be tight. I mean, that's all there is to it. They're going to be extremely tight. And depending on where this yield ends up, you've got to think that a 200 to 220 type carry out is going to keep you fairly excited, so to speak.

Matthew Bennett:  We know crush is going to be awfully good here domestically. Obviously, crush margins have been fantastic. But then you look at the global situation and you could potentially be looking at record global stocks for soybeans. We know that Brazil is going to tend to plant more bean acres this year once again. I mean, it's like almost what they've done the last 20 years.

But, you know, corn that's not the case. They're restricting a little bit on corn. I think that they're taking a look at the soybeans and saying, you know what, we're just going to keep on planting them. Your question, is there a story there? Okay. And so I think what you've got to remember is when you get this type of a rally like we've already seen, what are people talking about now?

Instead of the rally from 12 and a quarter up to 12.75, can we get 13? You know, Well, let's be cautious there, Paul, because there's been a lot of years that we have given our right arm for 12.75 beans, okay. And so I just want to be a little bit cautious as to get too greedy here whenever we've already had what I would say is a pretty darn good rally, especially in the face of what I think is pretty large global stocks.

Paul Yeager:  Pretty good rally in feeders this week. Can it continue?

Matthew Bennett:  You know, I think that the cattle market definitely responded well. Okay. It looks to me like, you know, we come in here and we we basically we we cover that gap that we we created with just the debacle after the cattle and feed report. We all knew that the market was going to move lower. But if we stop and look at that, yes, numbers were high, but what about overall numbers?

You know, what about the cattle herd? I mean, the cattle herd being at 65, 70 year lows tells me your cattle on feed numbers are going to continue to get you're going to have a wow moment probably in the next 2 to 3 cattle on feed reports to where I think a lot of the folks that were buying like for instance, April's to get them up pushing the $200 level.

And I really want to get to 200 because, Paul, I told you we are going to get to 200 and we haven't gotten there yet. Will we though? And I think that you've got a really decent shot to have it happen. Is it going to be on the timing that I thought it would happen? Not necessarily, but this week was definitely a nice week.

Of course, Friday we didn't close the way we wanted to, but five straight sessions of up markets there for the cattle, that's pretty, pretty strong showing, in my opinion.

Paul Yeager:  In Hogs, there continues to be a liquidation story about China and producers worried about African swine fever, sending them their animals to market early depressing prices. But here we rallied in the United States. Why?

Matthew Bennett:  You know, I think there's a couple of things. I mean, exports haven't been bad, first of all. But, you know, you look, you know, meat as a whole. And when cattle are continuing to be as strong as what they are, I think that there's a little bit of sympathy going on over towards hogs. Plus, they've just they've been bludgeoned, you know, and they finally were able to get a little bit of an upswing here.

I don't know that I get bullish just yet, but by all means, I think they've been beat up for long enough.

Paul Yeager:  Real quick, before we close on cotton, in your best 30 seconds of cotton, big five and a half percent drop this week. Why?

Matthew Bennett:  You know, the producers selling a heck of a lot of cotton in the south. First of all, they're talking about a huge acreage out of South America as well. So right now, cotton is kind of under a short term pressure. I don't think long term that you'll continue to see this sort of weakness. But I think you're going to go back down, maybe test that 77 level that was in May.

I don't know. You better hope that holds.

Paul Yeager:  I got a lot of good questions for you coming up here on Market Plus. So stand by, please. All right. Thank you, Matt, Matt, Bennett everybody. We are going to hold here and pause the analysis and continue our discussion about these markets and our Market Plus segment. You can find both analysis as well as plus on our Web site, of markettomarket.org.

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