Market Analysis with Sue Martin

[Yeager] Global tensions and trade conversations dominated the trade.  

For the week …

The nearby wheat contract added 11 cents and the March corn contract was even. 

Predictions for an even bigger South American crop pressured the soy complex. 

The January soybean contract lost 15 cents while December meal fell 40 cents per ton.

March cotton expanded $1.86 per hundredweight. 

Over in the dairy parlor, December Class Three milk futures fell 29 cents.

The livestock market was higher. February cattle added $2.95. January feeders put on $7.07 and the February lean hog contract improved $2.78. 

In the currency markets, the US dollar index added 97 ticks. 

January crude oil found $4.13 per barrel. 

COMEX gold expanded $140 per ounce, and the Goldman Sachs Commodity Index gained almost 15 points to settle at 545 - 75.

Joining us now is one of our regular market analysts, Sue Martin....

Sue Martin: Hello there.

Paul Yeager: This wheat commodity, we talk about the issues with Ukraine and Russia, dominate political news, dominates the trade news. Is it still all about that issue, or is it the global supply, the dry weather? Which one's the biggest factor right now for you? And wheat.

Sue Martin: I think in wheat it's probably the global factor. You look at Russian wheat and, of course, their supplies are tightening and they've got controls on price levels that they can export at. And in the meantime, you've got Argentina, who is priced much cheaper than Black Sea wheat and also has a good production. And then you look at Australia, they have good production better than they expected. And then you look at Kazakhstan and they're selling wheat into China. So I think it's global. And you know, it's very good that we've had the moisture, but the market sort of ignored the moisture and continued to push higher. And I wouldn't be surprised as we go into like the holidays and whatever that may be, the wheat market tries to push a little more just on fear of what if over the holiday.

Paul Yeager: G20 countries met this week. President XI, President Biden, they were in Brazil. There's all these conversations. There's deals over sorghum between Brazil and China in that global stage. We know it's about to change. One of the chairs is going to be different. Does that impact wheat or corn more? What happened this week and say G20.

Sue Martin: I would say probably impacts corn. Maybe. For now, I think that when I look at, you know, you look at the production in Brazil, first off, Argentina's production is expected to be down there planting less, mainly because of the leaf hopper situation the last year. And then you look at Brazil and there, whether they're catching some rains like they should in their rainy season, they've got another 45 days to go to prove they're going to have a decent bean crop. I think that when it's all said and done, we'll look back and say, well, they didn't get everything they needed, but still. And what it does is it buys us time, to be in the world market and export. But we have another situation going here when it comes to the US exporting. I mean, I think we're having a hard time as producers in the US getting our expectations and our thoughts or our arms around the fact that we're no longer number one, we're competing to be number one. And, Argentina competes to be number two. And I think that when we look at our situation now, for example, the dollar had a 7% bounce that got to 107, maybe penetrated it here on Friday. And so you've had a 7% increase just since September. And that increases the cost of the foreign buyer for the dollar, not to mention interest rates on letters of credit.

Paul Yeager: Right. And on that strength of that dollar has been it seems to be a problem on all of the commodities. Yes, I guess on everything. It's on everything. But I mean, I guess I'll ask again for the third time, which is being impacted the most then by the dollar.

Sue Martin: The stronger dollar, I would say it'll be corn. Although right now our exports to Mexico are very, very good. We're seeing some unknown destination exports. They could be Mexico. It wouldn't shock me if it was Chinese. But yeah, for now, I would have to say it's probably still corn.

Paul Yeager: Speaking of corn. Pennant formation technically forming. Then you, you don't know higher or lower, but you have the longs long again. Speculators along. Well, what's that telling you right now? Are you in a hold situation or are you in a sell situation with corn?

Sue Martin: Well, when I was on the show on August 30th, I was friendly into the turn of the year, and I still am. I think that, the market, one thing I would look at is, is, as I think corn and beans both will still push higher wheat to probably lead us, higher as we roll the year over. And, maybe towards February, March, you know, the baseline acres showed that we should or they expect us to have about 2 million more acres this coming year. And so beans might feel compelled. They have to compete a little bit. But I think that the corn still has potential to go higher. One thing I would keep in mind as we go into 2025, first off, years of a five year, beans or corn do not normally tend to be a bull year. And they tend to be more traditional, where you'll see the last quarter of the year where your lows will be. And if I look at corn for a lead contract for this next year. So, like, when, you know, these goes off the board March is on that now as a new year March goes off, May goes on, that type of thing. If we look at this year a lead contract and I had to relook at it a second time because I couldn't believe it. The high for the year was 473, 476, excuse me, and a quarter and the low, of course, 360, which came in September. So when you look at that, taking that 476 area 474, 76 for 80 is going to be extremely important because if we can have a lead contract, push that out, then we can start the ball rolling and saying, okay, now what do we have? So I would have to say that limits, you know, we've had for what, 442 something like that on the March contract. You know, you're not talking an awful lot more

Paul Yeager: Let's go back to your August 30th appearance. Then. You were more bullish on corn than beans. Pretty much everybody's been very bearish on beans. Yeah. You're still in that boat.

Sue Martin: I, I think I was bullish beans too. And I'm still in that boat too. I haven't changed on all three. I still think beans. Now, it's not uncommon for beans to break into the week before Thanksgiving. And we've done that. And the market's a little bit on a traditional behavior. And then we turn and we tend to become more, price positive as we get into late December. And I think it'll carry on forward. So that is why I think South American weather is so important because, Brazil. Yes, they're starting to catch some rains. And when they start looking at a new crop, of course the yield projections are going to be high. You know, you always start off with the best and then work it down. So I think that the next 45-60 days are very, very important. And also in a year of a five on soybeans, you tend to put your highs in early. It could be January. If it is that's a very bearish year. And again, I would have to say, looking at like say the March contract resistance probably comes in around 1080 to 1113 and support around 922. There should be extremely good support. I don't think we see an eight in front of beans.

Paul Yeager: Well, and we do have a quite we're going to quickly show the November 25th contract there. It has declined. It's still above $10. We have a $10 question we’ll answer in  Market Plus in a little bit. But I want to get into the livestock market. Cattle on feed came out just before we rolled here today. And there's significance of that. So let's see. I think you told me, placements 105, marketing 105 and on feed 100. Which number stood out to you and why?

Sue Martin: The placements? First off, the marketing at 105.2. We have. That was right. Almost on what they were expecting. And one thing we have to remember is I think we had an extra marketing day in the month of October, which meant you also had an extra day to place. And so but placements coming at 105, much higher than what the trade was thinking. My way of thinking is that's probably your highest placement you're going to see now for the next year. And so I would have to say, the, and also when I looked at the weight breakdowns for the feeders being placed, it was the lightweights that had the highest number of placements, the heavyweights. Not so they were the lowest number. So it's probably less positive to deferred contracts. But then we look at the moisture we've had in the plains, and I think we've already started to see a hold back. In fact, we're killing less beef cows and more dairy cows lately. And so I think we're starting to hold back some heifers and I think we're going to start holding back some, you know, beef cows from coming to market as well for the thought of breeding and going out on pasture.

Paul Yeager: But to that note, though, I mean, the weather kind of turned in the western plains a little drier this week, and the forecast doesn't look very optimistic. Can you change courses so quickly when you're not going to put them on pasture. You're going to have to slide them further east.

Sue Martin: Well, I think the wheat pasture looks good. And so I think we'll see cattle go out. I think what's going to affect them more, I think they're just getting a start on this. So it would be more important. Where are we in March, April. Right in through there. That's when wheat breaks dormancy and they pull the cattle off. And, and I think that's we also have to keep in mind this winter feels like it's going to be a little different than, uh, last winter we had.

Paul Yeager: That's just today it's, it's much colder today. We were talking about that before. I need to get to hogs because it's tied back into a discussion we had earlier. Again, China and Brazil having conversations impacting beef and pork. Yeah, pork though as you look at the chart, that thing has been on a trajectory. Did it finally break out of the range that it's in and are we headed higher?

Sue Martin: Well, I think we are. I think we're going to get a chance here. When I look at the Elliott waves and what have you, it looks to me like we might have stuck a low here this week. If the market is down on Monday, I'll bet you turn around and you take off on Tuesday. I look at the hogs and there's a lot of purrs happening in the Western Corn belt. Iowa, Nebraska, South Dakota into Minnesota. And so that's a concern. And we already are seeing less numbers coming to market anyway, before purr started. And so I think the hog hogs and pigs reports have not been on target. I think they've been wrong. Another thing, I think the eating habits people have missed the various generations of how they eat. And I think the younger generation goes for quicker stuff. You know, it can be chicken wings. It could be burgers, yes, and what have you. But then you get into the millennials and they maybe are going towards the pork chops and, and what have you. But the, but the older people, the baby boomers, they like steaks.

Paul Yeager: And they like big turkeys. Have a good Thanksgiving. Thank you, Sue, good to see you. We are 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 markettomarket.org. We also offer a third podcast, the MtoM. Each week we have three options to take us on the go. Subscribe today at your preferred podcast provider. 

Next week, checking economic conditions on Main Street and in the fields of America. 

Thank you so much for watching. Have a great week.

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