Written Commentary
By Dennis Smith 312-242-7905
October 13, 2020
CORN AND SOYBEANS
My buy zone in the Dec corn is 382-377. With harvest in full swing it’s best to remain patient and wait for the pullback. The down in soybeans is more definite than in corn with the soybean board inverted.
LEAN HOGS
Packers want you to think the cash will be steady. They’re trying to keep the cash from running sharply higher. Where are the hogs? The weekly kill is projected to come in below both last week and last year. The hog & pig indicates we should see at least 6% more hogs. Weights are accelerating especially on the packer owned hogs. That’s because they know/realize how short of hogs they’re going to be. They did the same thing in the PEDv year. In December of that year when I saw weights starting to rise I knew packers were worried and that there was going to be a real shortage of hogs. Prices exploded. We are looking to buy December hogs as penciled out in last night’s wire. The index stands at 7814 and we believe the index is headed to the 7850-7900 range into expiration on Wed. My liquidation target on long Oct futures and long deep in the money calls is 7890. We’re working futures orders at this price. Open interest in Oct LH remains above 11K.
LIVE CATTLE
Inflection point. Cattle futures are anticipating that cash is topping or has already topped with $1.09 in TX the high water mark. Note that IA no longer holds a premium to the south as it has for months. Futures sold off hard yesterday on volume of 64.6K and open interest dropping by 5,900. Chart damage was sustained. We’ve been hedging on rallies in the April contract since the end of July. Today, given a bounce, a recovery, we’ll look to go short the most active Dec LC contract. Look for a specific rec in the midday pork and beef update. Feeders appear to be headed lower as well. Spring time feeders should trade below 13000.
For a free 30-day trial to the evening livestock wire please send an email to: dennis.smith@archerfinancials.com
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