Pure Hedge - Livestock and Grain
4/24/24
The Livestock Markets were all lower today, and the Grains were mixed. June'24 Live Cattle were 1.90 lower and settled at 175.25. Today's high was 177.67 ½ and the 1-month high is 183.35. Today's low was 174.72 ½ and the 1-month low is 170.25. Since 3/22 June'24 Live Cattle are 7.65 lower or mor than 4%. The Feeders were down as well. May'24 Feeder Cattle were 1.95 lower and settled at 244.10. Today's high was 246.65 and the 1-month high is 255.92 ½. Today's low was 243 and the 1-month low is 232.62 ½. Since 3/22 May'24 Feeder Cattle are 9.67 ½ or almost 4%. The Hogs followed the Cattle lower. June'24 Lean Hogs were 0.50 lower today and settled at 107.45. Today's high was 108.40 and the 1-month and 52-week high is 109.65. Today's low was 106.80 and the 1-month low is 99.20. Since 3/22 June Lean Hogs are 7.75 higher or almost 8%. The Cattle Markets ended their run higher today and closed almost two dollars lower. I still feel that the Cattle Markets will head lower. I understand the tight numbers, but there is more weight in the market. I am Bearish in the short term and think it will be time to buy again late in the year. My upside target for June'24 Live Cattle is 176.80 and on the downside 172.80. For May'24 Feeder Cattle my upside target is 246.20, and the downside level is 241.51. The Hogs have been moving around, and if that market breaks, it will break fast. My upside target for June Lean Hogs is 108.40 and the downside level is 105.60.
The Grain Markets continue to be fun to watch. July'24 Soybeans were ½ a cent lower today and settled at 1181 ½. Today's high was 1191 ¾ and the 1-month high is 1222 ½. Today's low was 1179 ¼ and the 1-month low is 1145 ¾. Since 3/22 July'24 Soybeans are 24 cents lower or almost 2%. The Corn was lower as well. July'24 Corn was 4 cents lower today and settled at 448 ½. Today's high was 454 ¼ and the 1-month high is 460. Today's low was 448 and the 1-month low is 435 ¾. Since 3/22 July'24 Corn is 3 ½ cents lower or less than 1%. The Wheat market looked impressive today. July'24 Wheat was 10 ¼ cents higher today and settled at 613. Today's high was 617 and that is also the new 1-month high. Today's low was 596 ¼ and the 1-month low is 550. Since 3/22 July'24 Wheat is 43 ½ cents higher or more than 7 ½%. In the last 5-days July'24 Wheat is 60 ¾ cents higher or 11%. They are trying to chase the shorts out of the Soybean market. In May Soybean Options there are more than 24,000 open interest between the 1180P, 1190P and 1200 Puts, and in the May'24 1140P, 1150P and 1160 Puts over 6800 contracts traded today, and the open interest in those three strikes is over 26,000 contracts. At the same time, the open interest in the July'24 1100 Puts is over 11,600 contracts, and in the July'24 1120 Puts 2000 were traded today, with an open interest of over 7000 contracts. The next three trading days should be interesting. Farmers have been planting Soybeans here early and often, and where will all the beans go after harvest? There is already a huge carryover, and the South American crop will be large. China is already buying Brazilian new crop soybeans. Soybean inspections here are 10mmt behind last year's pace. The Corn stunting disease in Argentina is still lingering and farmers there are planting more soybeans. The short covering rally this week will need to be corrected, and I feel that will happen next week, after May'24 Options expire on Friday. My downside targets for July'24 Soybeans tomorrow are 1173 and then 1166 ½. The Corn Market looks like it can rally. Corn inspections last week were higher than expected, and it sounds like the Corn in Argentina could be in trouble. The Corn crop is still dealing with the corn stunting disease. With the cut in Corn acres here, (to plant more Beans) any weather problems could be a big market mover, and we would quickly see $5.00 Corn again. My upside targets in July'24 Corn are 457 and then 464, The downside levels are 444 and then 437 ¾. The Wheat Market looks strong, and it could go much higher. India's Government is having a problem buying enough Wheat. Their purchases are down 25% from this time last year. Currently they have purchased less than12mmt of Wheat, with a target of 30-32mmt for the year. India might have to import Wheat this year. The Wheat in Kansas needs some rain, and the forecast is for rain in parts of Kansas but not in the dry Southwest of the State. The crop conditions there have declined and some of that could be due to freeze damage. I have heard some wheat in Kansas is turning blue, and I can’t see that being positive. Egypt is importing up to 2% more Wheat this year, and the Ukraine Wheat estimate is down 11% from last year. Still waiting to hear details on the Russian Wheat crop, but its dry there as well. My upside targets for July'24 Wheat are 621 ¼ and 632 ½, and on the downside 585 and then 576 ½.
-Bill
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