Takeaway

The presenter argues that wheat is the market leader due to its connection to crude oil, and a break above the 5.45 pivot in Dec Corn could signal a recoupling of these markets, pulling corn higher. In livestock, the speaker highlights a fundamentally bullish setup in cattle, with USDA data showing a significant drop in commercial beef production, suggesting potential for higher prices into the end of the year.

What the presenter said

• Soybeans saw a technical bounce after a bearish key reversal on Friday, driven by strong demand and higher-than-expected export inspections. [00:29, 00:43]
• The presenter questions how corn yields can continue to fall while soybean yields inch higher, noting that a 1.5 bushel drop in soy yield could cut carryover in half. [01:17, 01:37]
• China has been an aggressive buyer, and while more purchases are not expected before the Trump-Xi meeting, agriculture is expected to be a major feature of the summit. [02:07, 02:28]
• Wheat is considered the market leader because of its link to crude oil, with Russia being the #1 wheat exporter and #2 diesel exporter. If crude and diesel rally, wheat should follow. [02:47, 02:56]
• The presenter's clients east of the Mississippi River report corn yields down 10-15% from last year, much steeper than the broader 4.5-5% drop. [03:51]
• Global stocks-to-use levels are tight, with corn at 20.6% and soybeans below 2013 levels, indicating a need to ration demand. [04:32]
• USDA has reduced its commercial beef production forecast for three straight months, totaling over 560 million pounds. Year-to-date production is down almost 4.5% from last year. [08:55]
• The supply of cattle is simply not there, with meat packing facilities closing. [09:21, 09:26]

Trade ideas

• Instrument: Dec Corn

  • Direction: Long
  • Entry: Above 5.45
  • Target: None stated
  • Stop: None stated
  • Horizon: Unspecified
  • Conviction: Medium
  • Thesis: The presenter believes a break above 5.45 would imply crude oil and wheat are coupling again, with wheat and crude rallies pulling corn higher via the ethanol market and concerns over lower yields.

• Instrument: Cattle

  • Direction: Long
  • Entry: None stated
  • Target: 2.30-2.40 (for Fat Cattle)
  • Stop: None stated
  • Horizon: Short_term
  • Conviction: Medium
  • Thesis: Due to tightening supplies, the speaker suggests funds may build a large long position, leading to a potential rally closer to the Thanksgiving/Christmas period, especially if energy prices top out.

Levels and data cited

• Price Levels:

  • Nov Beans: 12.95 (Support)
  • Dec Corn: 5.45 (Resistance / Pivot Point)
  • Fat Cattle: 2.30-2.40 (Potential Price Target)
  • Crude Oil: Over $100
  • Diesel: $6 (Current Price), 30% higher than 2008 peak

• Data Cited:

  • USDA WASDE Report: Referenced for market context.
  • USDA Export Inspections: Came in above the highest trade guess for soybeans.
  • USDA Crop Conditions: Noted as important to watch this week.
  • Global Stocks-to-Use: 20.6% for corn; soybeans below 2013 levels.
  • USDA Commercial Beef Production: Down over 560 million pounds in three months; YTD down almost 4.5% from last year.
  • China's CAST: Noted China raised its import figures last week.

Risks and what would invalidate this

• Crop conditions for corn declining further.
• Soybean pods not filling out despite higher pod counts.
• A halt in aggressive Chinese purchases after the US-China summit.
• A sharp drop in crude oil prices, which would be a bearish flag for the wheat market.
• A Federal Reserve rate hike impacting inflation and the US dollar.
• Weak demand in the hog market due to erratic cutout values.
• Higher energy prices beginning to negatively impact protein consumption.