Corn and soybeans end higher Tuesday, while wheat slides. Feeder cattle soar, while live cattle and hogs end mixed.
Chip Nellinger, Blue Reef Agri-Marketing says the corn market saw a technical bounce and even some bull spreading on Tuesday, but most of it was tied to short covering.
“I think prices just got too cheap and the funds decided to cover some short positions with the WASDE coming up on Thursday,” he says.
Nellinger expects USDA to tighten the old crop balance sheet for corn with an increase in corn demand via ethanol production and exports. How much of that will be offset by lower feed demand is unknown.
He doesn’t think USDA will change the South American corn production estimate even though many private firms have raised their projection.
“Brazil corn harvest has just started so it wouldn’t be uncharacteristic for USDA to wait for more yield data,” he explains.
Soybeans were slightly higher for a second day with some buying tied to optimism about at least a truce being declared after the trade meetings being held between the U.S and China in London.
Although he warns, “I think a deal is a long ways down the road.”
Wheat futures set back for a second day nearly erasing all of the gains of last week.
Nellinger says is was disappointing because there have been several attempts at a chart breakout in the wheat market to push the funds to blow out of their massive short position, but they always fall short.
He chalks this failure up to technical selling, improved crop ratings by 2% for both spring and winter wheat and anticipation of winter wheat harvest pressure.
Live cattle ended mixed with feeders into new highs after a wild session.
Nellinger says social media reports early Tuesday indicating ICE raids at beef packing plants in Omaha, NE, pressured the market early.
Glenn Valley Foods in South Omaha had 75 to 80 workers detained, hit by the largest government immigration enforcement operation in the state since 2018.
It also set off rumors that meat processing plants and stores elsewhere in Nebraska were being raided.
Some light cash cattle trade was reported at $235 in Texas, on Tuesday afternoon, up $5 from last week.
Cash traded has traded at record levels for seven weeks and continues to hold up the futures according to Nellinger, triggering buying on every break.
Lean hog futures were mixed with nearby contracts highs, deferreds lower. He says the new highs for the move in the June and July contracts is being pushed by strong pork demand and higher cash values.
Fund buying has also been fueling the rally and managed money is over 100,000 contracts long, but Nellinger thinks there is still some upside left in the market due to disease problems.
