Howdy market watchers. It’s dry and we need prayers for rain. Today, is actually the best chance for precipitation over the coming week and hopefully it becomes a reality.
Producers with early planted wheat planning to graze stocker cattle have held off or limited buying cattle due to uncertainty of wheat pasture forage. This lighter demand for calves has impacted feeder cattle prices, which sold off again this week, losing around $6 per cwt since Oct. 6 back to levels in June. November feeders closed the week at $135.025. A little shower would go a long way, but with La Nina conditions strengthening, the outlook doesn’t look very reassuring.
Producers should strongly consider annual forage protection through crop insurance. Contact Brenda or Bambi at Sidwell Insurance to learn more about this program that pays on drought conditions.
Dryness also has continued to drive the wheat market higher. KC wheat broke above recent highs on Thursday and closed the week at $5.58¾. This puts new crop July 2021 wheat at $5.75. Dryer conditions in Russia and Ukraine in addition to the U.S. have continued to support prices, as has fund buying. Managed funds added another 4,800 longs to their already net long position this past week. Ukraine has caught some rain, but export prices continue to rise from the Black Sea region. Ukraine export prices hit a two-year high while Russian wheat export prices jumped another $8 per ton.
Corn’s bull market also has been spilling over into wheat prices. Prospects for much higher exports to China, which could reach 20 million tons, have traders positioning and managed funds adding 36,400 longs this week. Chinese corn futures on the Dalian exchange this week hit an all-time record high at $9.70 per bushel. These demand prospects drove U.S. corn futures to new recent highs with December 2020 reaching $4.09 during Friday’s trade. December corn closed the week at $4.02. The carry to future months in both corn and beans has flattened, indicating strong nearby demand.
Harvest progress in the U.S. advanced more than expected this week at 41% versus 39% expected. Soybean harvest also progressed 2% faster than expected at 61% complete. Yields have been variable, but we’re heard a lot of reports of impressive yields for soybeans. Continued delays in Brazil soybean planting has supported the soybean market as has continued China buying. On average for this time of year, Brazil is typically 10% planted, whereas it is only 2% planted this year and has been for two weeks. For Mato Grosso, the largest soybean planting province, and Parana and Mato Grosso do Sul, early planting is historically slow as rains are awaited. First crop corn planting remains in line with last year and the average levels. Should China buying continue and planting delays persist, we likely are to see continued firmness in bean futures. Despite these conditions, however, soybean futures did not top last week’s highs. November soybeans closed the week at $10.50 after making a weekly high at $10.73½. November bean options expire on Oct. 23, so be mindful of protection you have that is expiring if you haven’t marketed beans yet.
Sesame harvest is just getting underway and Enterprise Grain is having a harvest workshop at 8:30 a.m. Tuesday at the Sidwell Seed facility in Goltry along Oklahoma 45 with coffee and doughnuts provided, then at 5:30 p.m. at P&K in Enid with dinner and drinks provided by Enid Brewing Company. We will have combine expert John Aubin at both locations for a practical presentation on setting your combine and header to optimize harvest yield. All sesame growers are welcome to attend, so invite your neighbors. Whether you’ve planted sesame or not, all growers with combines will benefit from this workshop.
A few closing comments on cattle. Live cattle have been trading cash at $108 this week. There has been long liquidation by the funds in cattle ahead of the election with concerns over demand and higher corn and feed prices. If you’re buying cattle and need to protect, I would advise put options versus hedges, although if you hedge, consider buying a call option to keep the upside open as I believe there will be opportunities for this cattle market to recover later in the year. Hogs continue pushing higher with continued buying from China and other Asian countries, and this could spill over into the beef market at some point. If selling cattle in the near term as these prices have dropped, consider buying a call option to stay in the market should this market rebound after you sell physical cattle. We have talked to a number of producers about this strategy who are selling physical cattle now and can be a good way to recoup the recent losses. Give me a call at (580) 232-2272 or stop by our office to get your account set up and discuss strategies to protect your exposure to these markets. It is never too late to start, and there is no operation too small to get a risk management and marketing plan in place.
Remember, I am on-site at the Enid Livestock Market on Thursday, sale day. If you’re needing seed wheat of any variety, be sure to call Sidwell Seed at (580) 874-2286. We have a wide variety of bulk and bagged seed including WestBred, Limagrain CoAXium, OGI/OSU, Agri-Pro and KWA with multiple pick up points in Kremlin, Goltry and in bags at 81 Feed and Seed in Enid and Medford with advance notice. Wishing everyone a successful trading week.
Sidwell is a Series 3 licensed commodity futures broker and principal of Sidwell Strategies. He can be reached at (580) 232-2272 or at email@example.com. Futures and options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at http://www.sidwellstrategies.com/disclaimer.