Grain markets were lower except for corn futures on Wednesday. The strength in corn was attributed to short covering but John Heinberg, with Total Farm Marketing, says it was impressive considering wheat was making new contract lows.
He says corn is still building on last week’s higher weekly close and so far, the contract lows have held. “The corn market is basically in consolidation mode here over the last seven trading sessions bouncing between $4.20 and $4.30 basically caught between the 20 day and 10 day moving averages on that May contract,” he says.
Corn may also be seeing some demand surfacing according to Heinberg. If exports are decent Thursday morning and May corn can get a close above $4.30, he thinks the market could see some additional short covering before the WASDE Friday.
The second down day in wheat was tied to technical selling and both Chicago and Kansas City futures scored new contract lows.
However, Heinberg says there was talk in the trade that China had cancelled U.S. wheat sales. “They may be walking away from some of their earlier soft red winter wheat purchases from back in the late fall. We’ll see if that is validated but the spreads may be telling the story, “ he says.
Black Sea exports are also negative for the market, especially as Russia continues to undercut world prices and the U.S. is not competitive. Rain chances in the Southern Plains may have also added to the pressure.
Soybeans ended slightly lower despite higher soybean meal. Heinberg says while soybeans had a higher weekly close its hard to rally the market with Brazil harvest pressure keeping a lid on prices. He says at least the Brazilian soybean basis levels have improved verses U.S. prices. “Their premiums are significantly below the U.S. market but at least that gap is narrowing,” he says.
The markets are also positioning ahead of the Friday WASDE with South American numbers the main focus. “I think USDA will slow play those numbers and not give the market what it wants,” he says.
