Grains closed lower on Wednesday, failing to generate any follow through buying after the rally Tuesday. Cattle end mostly higher.
Matt Bennett, AgMarket.Net, says the disappointing day in the grain markets was a combination of profit taking by the funds and an acceleration of farmer selling as the end of the month approaches and March contracts go into delivery. “You hear about a lot of folks trying to figure out do we roll these contracts to the next month, do we stay long grains so to speak? Or do we just throw in the towel and be done with it?” Some producers are replacing those positions with some paper ownership, but he says the bottom line is there’s a lot going on at the end of the month.
March corn futures hit another new contract low and Bennett says the market looks like it will need to go lower to find chart support or to stimulate demand. “You’ve got to look long term for chart support because you’re below all your moving averages. When we get down to these levels I look at what kind of psychological support might be around $4? I personally don’t think you break $4 this early in the growing season.”
March soybeans made new lows for the move and are closing in on the May 2023 low around $11.45, which is the contract low. Bennett thinks the market will test that level. “If you test it and go below it its not going to be pretty,” he says. The market is disappointed after starting Monday night with a gap higher opening and hopes for a longer term rally. However, Bennett says the funds continue to sell every uptick in the market.
Wheat futures failed to extend Tuesday’s gain especially after a reversal off contract lows in Chicago wheat. However, the market held up the best technically Wednesday especially considering the lower corn and soybean complex. “And yesterday this wheat market looked like it was finally going to do something and pull corn and beans along. You know wheat has taken us out of the doldrums before,” he says. Bennett expects lower spring wheat acres and there is still the possibility for a weather scare in the winter wheat.
Live and feeder cattle futures made new highs for the move but ended off session highs. Bennett says its been a great rally but he is concerned the market is getting ahead of itself ahead of the Cattle on Feed Report. “Yeah we’re expecting a low placement number but I’ve got to believe there might be a little profit taking going into this report,” he says.
