Grains are mostly higher Wednesday morning except hard red winter wheat, cattle are trying to recover.
Kevin Duling with KD Investors says corn and soybeans are building on the reversals scored on Tuesday after corn made new lows for the move and then bounced.
He thinks the market is trying to add some weather premium with extended forecasts turning hot and dry the last half of June.
“The corn market has no weather premium built in,” he says.
He doesn’t, however, believe corn traders are concerned about the 6.67 million acres of corn left to plant as of Monday’s USDA crop progress report.
Corn may be getting a lift as well from news that the U.S. is making progress on trade negotiations with several countries and will be announcing details soon.
Soybeans are extending gains with some hope about U.S. China trade talks between the two presidents and word of additional deals with other countries soon to be announced by the administration.
However, soybeans need to get above resistance he points out.
“We’ve been hovering around that $10.50 mark on the July contract and need a close above that level,” according to Duling.
Wheat futures saw a pop on Monday adding in geopolitical premium as the fighting between Ukraine and Russia escalated but have since been unable to add to the gains.
Tuesday the market ended lower with harvest starting to progress in winter wheat areas and with a 5% improvement in U.S. spring wheat conditions.
However, Duling says the crop is going backwards in the Pacific Northwest and there are also problems in the Northern Plains and Canadian Prairies tied to drought.
While he doesn’t think its enough to scare the funds into covering their short positions in the market, he does think the lows have technically been confirmed by head and shoulders formations in all three wheat classes.
Cattle futures scored reversals on Tuesday after nearly touching the May contract highs in live cattle and then selling off.
The markets are trying to recover on Wednesday morning still supported by the huge premium of cash over the futures, but Duling says the technical picture looks rough.
