AgDay TV Markets Now: Chuck Shelby Explains the Uncertainty that Tanked the Ag Markets Tuesday
AgDay TV Markets Now 03/26/24
Grain and livestock futures were mostly lower Tuesday with uncertainty surrounding the HPAI cases in dairy herds as well as the Baltimore port closure.
Chuck Shelby, Risk Management Commodities, says grains saw a combination of technical and farmer selling. "We've had a good run in these markets. We've seen farmers who rewarded this rally here rightfully so as we come a long way off of the lows we had in February. I think producers wanted to move grain before they got into the fields and before Thursday's reports from USDA."
Shelby says technically grains have run into chart resistance at the upper end of the trading ranges as funds covered short positions end of quarter and end of month. However, report positioning was also evident. "If we're going to move above these technical areas, we're going to need something positive in the reports to make that happen."
Uncertainty also came from news of the closure of the port at Baltimore. "It certainty is a major impact on shipping and inputs coming in and out of this country and so another negative. It is a big disaster," Shelby adds.
As far as the reports, Quarterly Stocks all look to be higher than a year ago. Shelby says USDA gave the market a really big soybean number at 87.5 million acres. "I guess our feeling is that bean acres are going up, but we look for the number to be a little smaller than that. You have cotton at a good price, you have milo, you have possibly canola and other crops that take away from soybeans," he says. An 86 million- or 85.5-million-acre soybean number could give a boost to the market.
Conversely, USDA expects corn acreage to be around 91 million acres but private estimates are above that figure. Shelby says 92 to 93 million acres of corn will be a bearish shock to the market because it puts ending stocks closer to 3 billion bushels. "When you look at using a 181 trendline yield you really need the corn acreage number to be down around 90 to give us a bullish reaction."
The cattle market saw triple digit losses with the market still digesting the Cattle on Feed but most of the losses were tied uncertainty coming from USDA confirming Highly Pathogenic Influenza in dairy cattle herds in Texas and Kansas. "This is an overreaction to that occurring but we see a market that has been really high priced and so you see some movement out of it today and again hopefully tomorrow we're going to see cooler heads prevail," he says.
Shelby says beef demand is still there, and we are entering the spring grilling season and so these areas of support should hold on the cattle charts.
