Turnaround Tuesday is in play

Today is Veterans Day. The day we set aside to honor those who have served our country. Thank you.

Turn-around Tuesday is back in play as usual. Significant gains yesterday, getting checked today. As US soybeans are already a high-priced product for importers, yesterday’s strength makes them even more expensive. To note, though, the US is still seeing solid soybean demand, which, on the whole, is more economical than other oilseeds.

As we get deeper into the week, more interest will be placed on the WASDE report being released this Friday. It’s pretty universal that analysts are forecasting a cut in corn and bean production; now it's just a question of how much. Any cut in US soybean production will be offset by a cut in demand to maintain adequate ending stocks.

Soybean softening could be part of another short-term correction, as yesterday’s soybean rise was matched by a decline in Brazilian FOB export premiums. Brazilian soybeans are now offered after the first year at prices significantly lower than those of the US Gulf. China has not confirmed the US pledge to secure 12 MMTs of US beans by the end of the year or its 25 MMT commitments annually in 2026 through 2028.

Soybean prices are vulnerable without any Chinese confirmation soon, or the current rally could quickly give way to a retest of last week’s lows near 11.00 on the January contract.

After a sharply lower opening Monday morning for cattle futures, a sharp reversal occurred quickly, with live and feeder cattle trading limit up by mid-morning. There will be expanded limits today of $10.75 on live cattle and $13.75 on feeder cattle. January feeder cattle are anticipated to open in the 331-333 price range, given option moves after cattle went limit-up.

The discount to cash for both live and feeder cattle was addressed quickly. Stability arrived last Friday, with the trade neutralizing itself and closing higher than it opened. That set the stage for a dramatic recovery yesterday, which could carry December cattle back to the 231-232 range, with feeder cattle ultimately targeting their failure point at 340, where a gap sits ominously on the charts.

Box beef had choice gaining $0.92 yesterday, but select was off $1.39. Box beef values should be bottomed but may struggle till Thanksgiving. End-of-the-year holiday celebrations and Christmas parties lift boxed beef values in December. Last week’s 5-area average dear price was off $2 for the week, but hedged feedyards are given a strong basis to increase sales. That put negotiated sales up 22,000 head to a 3-week high of 77,403 head.

Yesterday’s reversing action, following Friday’s stability trade day, is setting the stage for a potentially stronger recovery, with December live cattle’s altitude determined by cash, while feeder cattle could be back to targeting the gap at 340-348.