Corn and soybeans end quietly mixed Wednesday. After opening lower on profit taking and bearish overnight news on China’s economy the markets rallied up into chart resistance.
Funds have been covering some of their record short positions, so soybeans took another run at $12 and corn at $4.45 on the charts but stalled out. However, some farmer selling has capped the rally as well.
Don Roose, U.S. Commodities, says the markets have at least stopped going down. “You know it’s a market that over the last two and a half months that every time we would get some neutral to negative news it would go down and down hard. Now we get news that is neutral to negative and the market hold or goes higher.”
In fact, Roose thinks the negative news has been worked into prices and the markets are trying to add risk premium. “How much is going to be dependent on weather.”
Roose says the U.S. Drought Monitor is showing expanding drought again and he thinks at some point that will get the trades attention. “If we go from El Nino to La Nina that would mean a warmer than normal summer,” he says.
Wheat was lower in all three exchanges with the news that China was cancelling French wheat. “I think China is getting cozy with Russia and will likely buy wheat from them with their prices much lower than anyone in the world,” Again, he thinks the wheat market need to add some weather premium with the dryness in the hard red winter wheat belt.
Live cattle make new highs for the move driven by fund buying but Roose says strong domestic demand has also been supporting the market. “We are getting an early demand push with the warmer than normal weather in much of the U.S.”
Lean hogs see some profit taking and hedge pressure, but the lean hog index and cash trade are also stalling seasonally which may have added pressure says Roose.
