Friday’s “Triple-Witching” event was not friendly to the grain markets.
Today’s “Triple-Witching” event was not friendly to the grain markets. The end of the month, and the end of a fiscal quarter, can add a little extra flare, and when you throw in a mildly bearish USDA report, the result can look a lot like today’s price action. Both soybean and wheat stocks came in higher than initial average estimates, while corn ending stocks came in lower. Historically, the month of October is a little more kind to the grain markets, but the potential for a government shut-down in the coming weeks could have an effect on USDA reporting in the near future.
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December corn grinded steadily higher for the majority of the week on short-covering, but Friday’s price action wiped out almost all of those gains. After settling 11 ¾ cents lower on Friday to 476 ¾, December corn finished the week up just ½ of a cent. The actual figures in today’s Grain Stocks report were likely less bearish than price action indicated, but corn futures simply just followed corn and soybeans lower. With Friday’s settlement, we are at the exact upper boundary of our 472-476 pivot pocket. If the contract is subjected to additional selling pressure next week, bulls will have to defend 2-star support between 460 and 464 ½. Managed funds entered the week with an estimated net-short position of 149,455 contracts, and added another 17.2k contracts to that position for a new estimated net-short position of 166,666 contracts. Broken down, that is 334,848 short positions and 166,180 long positions.
Today’s upside surprise on soybean ending stocks had a resounding effect on the November soybean contract. Soybean prices moved mostly sideways for the remainder of the week, but Friday’s trade saw November soybeans shed 25 ½ cents to settle at 1275. We broke, and settled, below critical 4-star support between 1280 and 1285. Bulls will likely have to defend 3-star support between 1247 and 1257 next week if selling pressure permeates. This was the 5th consecutive week with a lower close on the November soybean contract. Losses this week were a little lighter than last week’s, but we still saw the contract shed 21 ¼ cents. Managed funds trimmed their modest net-long position by approximately 10k contracts this week to 25,930 contracts. That amounts to 80,290 long positions and 54,360 short positions.
December wheat continues to buck seasonal tendencies by moving lower. The month of October is typically more friendly to wheat prices as more commercial end-users begin booking commitments for the end-of-year baking season, and wheat bulls hope that materializes in short order. December wheat futures were the biggest loser in Friday’s trade, settling 37 ¼ cents lower at 541 ½ to set a new contract low. For the week, wheat was down 38 cents. Wheat values are now at the lowest since August of 2020. Bulls will have their work cut out for them next week to try and claw their way back to 2-star support (now resistance) at 570. Managed funds remain pessimistic, but didn’t see much of a change in their net-short position, coming in at 102,417 contracts. Broken down, that is 66,272 long positions versus 168,689 short positions.
It was a choppy week in the livestock markets as positioning ahead of the end of the quarter may have played a role in price action. In the last trading day of Q3, it was lower across the board.
At the close December live cattle were 2.50 lower to settle at 187.92. Despite today’s weakness, December futures were 3.12 higher for the month. November feeder cattle finished the day 2.77 lower to settle at 254.90, that’s 2.75 lower for the month. December lean hogs were the anchor in the livestock market today, setting the session locked limit down, which is 3.75, settling at 71.77. For the month, that’s 2.55 lower.
This morning’s wholesale boxed beef report was little changed with choice cuts gaining 90 cents to 302.41 and select cuts losing 11 cents to 277.33. Yesterday’s 5-area average price for live cattle was reported near 183.75, steady with what we’ve seen for much of the week. Daily slaughter was reported at 124,000 head. That puts week to date slaughter at 505,000 head, 2,000 head less than the same week last year but 7,000 head more than last week.
Volatility in the outside markets continues to be monitored closely as consumer confidence continues to dwindle, posting two consecutive months of declines. If consumers are worried about the economy they may start pulling back on spending which could impact demand for beef.