Corn and soybeans see double digit gains on fund short covering after seven down days.
John Payne, Advance Trading, says the markets were oversold and due for a correction but admits there were other bullish factors.
Soybeans led the rally with help from soybean meal and soybean oil.
Brazil has announced a 20% tax that will hit many agricultural products and may be favorable for the U.S. “These farmers are kind of at the cost of production. So, if you’re going to raise taxes in Brazil you’re going to slow growth,” he says. An Argentina strike and strong bean oil premiums also lifted soybean oil.
Corn followed the rally in soybeans but was also lifted by strong weekly exports of 46.5 million bushels, as well as a flash sale of 6.o million bushels of corn to unknown destinations.
“We announced some corn sales this morning likely to Europe and rumors of China buying U.S. corn with dry conditions in Southeast Asia right now. The Chinese could certainly be having weather problems. I find it difficult to trade on Chinese weather news but if that’s going to rip the market higher, I think that’s the case,” he says.
Payne says the U.S. has also gotten competitive on corn with Spain buying corn from Ukraine at higher prices of $225 per metric ton.
Corn and soybeans both ran into chart resistance on the close with July soybeans at $12.00 and Payne says it will be tough to break through those areas.
He is also fearful that there will be plenty of selling when the July contracts go into delivery.
