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December Option Expiration Could be a Market Mover

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Good Morning! From Allendale, Inc. with the early morning commentary for November 22 2017.

We want to wish everyone a Happy and Safe Thanksgiving!

Grain markets are in a buying time mode with the holiday approaching and option expiration on Friday. The stock market is setting new record highs.

Option expiration is on Friday and this could create volatility on a historical low volume shortened trading session. The largest total open interest is at the 3.50 strike.

Weather forecast on Friday and Monday will be important as Brazil's conditions seem to be ideal for planting progress and growing crops. Argentina's weather has traders on edge as dry conditions are a concern and being watched closely in the forecast.

Agricultural markets will be closed on Thursday and grains will re-open on Friday morning at 8:30 am CT. Friday's session: grains will close at 12:05 and livestock will close at 12:15.

Weekly export sales this week will be delayed until Friday morning at 7:30 due to the holiday. The CFTC Commitment of Traders report will be released on Monday.

Brazil's soybean planting is now equal to average at 72% complete. While their 1st crop corn, planting is 81% complete compared to 83% average. Argentina will be releasing its update later this week.

Funds were estimated to be net sellers of 2,500 contracts of corn and 1,500 contracts of soybeans on Tuesday. They were net buyers of 4,000 wheat contracts.

Fed cattle exchange auction is offering 955 head today. Trade will be looking for an indication of cash prices this holiday shortened week. There were cattle traded at 118 yesterday which would be lower than Friday's trade.

Demand for beef domestically and for exports has been an important offset to large supplies. The rally in the stock market has provided a much happier Thanksgiving to livestock producers.

December live cattle futures traded an inside day on Tuesday relieving some of the oversold condition. However, prices need to push above and close above the 50-day moving average to getting increased technical buying.

Cash hog values continue to drift lower as supply is outpacing demand. December lean hog futures contract finds the 60.00 level as key support with 62.50 resistance. Expect a quiet trading today as traders head for their Thanksgiving events.

Dressed beef values were mixed with choice up 2.45 and select up .60. The CME Feeder Index is 156.71. Pork cutout value is down 1.40.

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About the author

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.

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