AgDay TV Markets Now: Matt Bennett says Corn Higher for Third Day but How Big Will the Recovery Rally Be?
AgDay TV Markets Now 02/28/24
Corn closed higher for the third consecutive day with talk of China purchasing U.S. corn off the Pacific Northwest. However, the market was oversold and also saw more short covering by speculative traders after the reversal off new contract lows on Monday.
So, is this bottoming action in corn? Matt Bennett, with AgMarket.Net, says it was encouraging especially as corn shook off the lower wheat market. “You come in here today and the wheat market is getting beat up, some of this is what’s going on over in the EU, some of the price action there has been just horrible. But you look at corn we’re getting a little confidence that the low might be in,” he says.
With first notice day on March contracts Thursday, Bennett also thinks liquidation and farmer selling has run its course. However, even if the market is forging a low it will be tough to stage a rally with farmers selling on any strength and basis will just widen even if the market rallies. “Can I get super bullish, fundamentally no. You’re going to have some prolonged heat and dryness in South America. You’re going to have to throw some problems at that safrinha crop and then you’re going to have to have some verification of maybe a little less corn acreage.”
He says RSI or the Relative Strength Index got down to around 20 on corn. “You don’t spend a lot of time that oversold in the corn market usually you get to 25 you start to correct that situation.”
As far as China purchasing corn, he says looking at FOB values the U.S. is competitive with Brazil right now and that is even with Brazil corn futures taking a tumble recently. “You look at those FOB values it makes sense for China to buy off the PNW,” he adds.
Soybeans ended slightly higher bouncing off new contract lows again. The market also followed corn and soybean meal which rallied off new contract lows. Bennett says that market will continue to be pressured as Brazil harvest advances and weakens their basis. Plus, there were another three to four cargoes of Brazil soybeans purchased by an ender user in the southeast U.S. “Arbitrage is going to continue to be an issue,” he says.
The wheat market set back with lower European wheat prices which was discouraging considering wheat looked like it was also trying to bottom and possibly pull the row crop markets up.
