JAN BEANS

With a confluence of month-end machinations, Jan Beans repeated inability to breach the $12.00 mark & a rain forecast for S/Aencouraged massive fund profit-taking & liquidation! And the macros added to the risk-off environment – with the DJI down 400 points the US dollar higher & crude oil down $.50!However, Monday exports were impressive with 340,000 MT of corn sold to unknown & 2.036 MMT of beans reported in the 10 am inspections going forward, the South America El Nina weather pattern & China’s aggressive buying of our grains will drive the mkt! Also supporting a resumption of the “up” are tight stock levels – now on 5-year lows & historically cheap prices– finally, the coming vaccine is good for all mkts!

DEC CORN

This morning at 2 am, Mar Corn scored new contract highs (439 12) – before retreating under the weight of month-end evening-up, a sharp decline in Jan Beans, a rainy forecast for S/A & Russia’s increased wht export quota! The result was a stunning chart key reversal – that have some pundits questioning whether a seasonal top was put in? However, the bull fundamentals are still pretty strong – Brazil & Argentina are still very dry – being ravaged by El Nina – and lately the scant rains they have received haven’t been enough! And China still seems to be in a “buying mood” as they rebuild their hog herds decimated by the ASF! And the magic wildcard seems to the Covid vaccine – soon to be widely available – and all mkts like! Plus going forward, we have no margin for error due to our tight stocks – so what if the upcoming US planting & growing season is dry like S/A has been!

DEC WHEAT

The Russian agricultural ministry today said it may raise the wht export quota to 17.5mmt from 15.0– which would jack up their total exports to over 40mmt! This coupled with the steep correction experienced by its sister mkts – corn & beans – forced double-digit losses & Dec Wht’s lowest close since early Oct! Adding to these negatives were the crop ratings released at 3 pm – showing that the gd/ex rating went up 3% to 46% – the WW crop has benefitted from recent rains in the central plains! The wht mkt has pretty much dialed in its record world stocks and will be more influenced by the corn & bean action than any of its own fundamentals!

FEB CATTLE

Feb Cat recently rallied $6.00 (109-115) only to give back $3.00 (115-112) – such is the mkt action “pulled & pushed” by alternate “bad Covid news” & “good vaccine news”! It seems to be a “darkest before the dawn” scenario with the Covid resurgence creating some of the worst incidences around the country but at the same time, the promise of an effective vaccine just weeks away! So will the traditional Christmas beef demand kick in or be stymied by Covid! It’s really hard to say but when “all the smoke clears”, it seems the first quarter of 2021 will be an exceptionally good one for beef demand!!

FEB HOGS

Feb Hogs have experienced similar “back & forth” action as Feb Cat – rallying a quick $6 – then giving back $2 – & for the same reason! But the wildcard for the hog complex is the expected waning China demand-as the Chinese have aggressively rebuilt their hog herds thereby reducing their need for importing US pork! This import reduction will be gradual but will make it difficult for the mkt to absorb larger production into 2021! Hopefully, the vaccine-driven resurgence of the US economy in early 2021 will re-ignite domestic pork demand!