Live cattle futures have jumped this week, led by strength in the cash market late last Friday.
This has the various contracts in position to complete bullish technical patterns on their respective weekly charts.
As for the Grains sector, markets were generally quiet overnight through early Thursday morning with the key feature continued pressure from the commercial side.
Morning Summary: Coming up with the title of today’s Morning Commentary wasn’t difficult. All it took was a quick look at the Barchart Futures Market Heat Map that showed all sectors in the commodity complex wearing red to start the day. I see the hands coming up quickly. Yes, Livestock was decked in green, but keep in mind those markets don’t trade overnight. We’ll see what happens once Thursday’s opening bell rings. That being said, it has been an interesting week out in the Barn with live cattle contracts lined up to complete bullish technical patterns on their respective weekly charts by the time we get to Friday’s close. The most common feature heading into today’s session is new 4-week highs, a simple way of looking at momentum. This week’s activity was sparked by stronger cash markets late last week followed by early trade this week at higher prices with reports of $192 to $194 in the south. The soon-to-expire December contract jumped to a Wednesday close of $192.25, up $2.40 for the day, with February adding $2.35 to finish at $191.375. Commercial buying was seen throughout the market as Feb gained $0.375 on April which gained $0.25 on June and so on.
Corn: The corn market was under pressure overnight through early Thursday morning, not a big surprise given what we’ve seen from commercial traders the past couple days. March (ZCH25) dropped as much as 2.5 cents overnight on solid trade volume of 33,000 contracts. This followed Wednesday’s session that saw a new high for the move of $4.5125 before March closed at $4.4825, down 0.75 cent for the day. Additionally, March lost 1.0 cent to May which lost another 0.75 cent to July. Later in the evening, the National Corn Index (national average cash price) came in near $4.2275, down 1.25 cents from Tuesday putting national average basis at 25.5 cents under March futures. The first thing we see is basis weakened another 0.5 cent last night, adding to what we’ve already seen this week given last Friday’s final figure came in at 24.5 cents under March. This gives us a couple things to consider: 1) The pre-2025 buying spree from countries looking at new or increased tariffs being thrown at them is coming to an end and/or 2) More supplies have become available with the recent rally by the corn market. Technically, the March daily close-only chart is interesting in that it highlights corn’s Round Number Reliance.
Soybeans: The soybean market was quiet early Thursday morning as contracts sat within fractions of yesterday’s close. January posted a 5.75-cent trading range while registering roughly 20,000 contracts changing hands. March (ZSH25) was unchanged at this writing after posting a 5.5-cent range on trade volume of 17,000 contracts. With the Goldman Roll coming to an end today, meaning the commodity index is finishing its move from January to the first deferred issue, the spotlight now turns toward March contracts in the oilseed sub-sector. Fundamentally, soybeans remain neutral-to-bullish with the Jan-March futures spread covering 27% calculated full commercial carry at Wednesday’s close while the March-May covered 37% (with 33% the bullish threshold). Speaking of Wednesday, the National Soybean Index came in $9.4550, up roughly 0.75 cent from Tuesday and putting national average basis at 50.0 cents under January futures and 57.25 cents under March. Heading home last Friday those calculations were 49.5 cents under and 55.0 cents under respectively. With futures contracts struggling to move higher, the weakening of the basis market tells us demand is starting to slow in relation to available supplies. Technically, if we squint our eyes just right looking at the March contract’s daily close-only chart we can see a series of higher highs and higher lows.
Wheat: The wheat sub-sector was also in the red to start the day, though traders didn’t show much interest overnight through the pre-dawn hours. March Chicago (SRW) posted a trading range of 4.75 cents, from up 1.0 cent to down 3.75 cents and was sitting fractionally lower at this writing on trade volume of less than 5,000 contracts. With national average basis still weak, futures spreads closed Wednesday continuing to cover a neutral level of calculated full commercial carry. There isn’t much to get excited about with any of that. Over in Kansas City (HRW), March was sitting 1.25 cents lower as of this writing but still 2.5 cents off its overnight low on trade volume of about 1,500 contracts. The National HRW Wheat Index ($CRWI) was calculated near $5.0475 Wednesday evening putting national average basis at 62.5 cents under March Kansas City futures, as compared to this week’s previous 5-year low weekly close of 59.0 cents under March. Here, the fundamental spotlight is on the new-crop July-September futures spread as it covered a bearish 74% cfcc at yesterday’s close. March Minneapolis (HRS) was quiet overnight, registering trade volume of 650 contracts through early Thursday morning as it dropped as much as 3.5 cents before trimming its loss to 0.5 cent.
