Corn, Soybeans and cattle close higher Thursday before the holiday break, with wheat and hogs mostly lower.
Mark Schultz, Northstar Commodity, says corn and soybeans saw follow through technical buying and short covering heading into a three day holiday and after bouncing off support. He also thinks weather was a factor.
Corn and Soybeans Extend Gains
The markets also saw some buying interest ahead of President Trump speech in Iowa Thursday night at the Iowa State Fairgrounds as he hinted he would be making a major agricultural announcement.
Markets were speculating it could be a deal with China and so soybeans saw the most positive response.
“I would tend to think there’s got to be something a little bit bigger to announce in agriculture if you’re going to Iowa, Des Moines, Iowa the day before the 4th of July. So I would suspect we have some type of announcements, maybe it’d be additional trade agreements that are being done and completed. Whether it comes in with China, rumors that maybe they’re looking to buy some beans. Obviously, they’re going to need some beans from the U .S. before they come into the end of this calendar year because South America cannot support them all the way through,” he says.
Even with the positive demand news corn and soybeans ended off session highs as they ran up into another layer of technical resistance on the charts.
Could a China Deal Alone Start a Bull Market?
Would a China deal be enough of a catalyst to get corn, soybeans, even wheat above recent technical resistance areas and start a bull market?
Schultz says purchases alone may not be enough to push the market higher, it would take a much more comprehensive deal.
“If we were to go back to the Phase 1 agreement that would be a surprise to me and I think it’d probably a surprise to the trade. I think we’re most people just looking that there may be a purchase by China of U.S. beans more than anything else. I can’t imagine they’re gonna come back in and sign some agreement to go back to Phase 1. If they do that might give you a push to the upside on the market as we move forward.”
Soybeans Also Get Push From Bean Oil and 45Z
One area that is already showing promise of increased demand for soybeans is biofuels. Congress passed the “One Big Beautiful Bill” with an extension of the 45Z Clean Fuel Production credit and bean oil responded closing more than $2 higher for the week.
He says the limitation of feed stock to only North American source is a real positive for the bean oil market.
Wheat Sees Harvest Pressure and Profit Taking
Winter wheat futures followed corn and soybeans early on but gave up those gains heading into the close.
The market saw profit taking and some with hedge and harvest pressure ahead of a three day holiday.
However, there are some weather issues emerging in the wheat market with the slow harvest, quality issues in the wheat and drought concerns in hard red spring wheat areas like Montana, the Pacific Northwest and Canadian Prairies.
Cattle Extend Gains on Better Cash News
Cattle futures saw follow through buying on Thursday after the big reversal on Wednesday and in reaction to improving cash news.
Schultz says cash prices were up to $225 in the South on Thursday and overall cash business was done at better than expected levels.
He says Choice boxed beef saw a correction at noon on Thursday but has been very strong with prices still above $390 and packer margins are now in the black.
Lean Hogs Continue to Correct
Schultz says lean hogs continue to consolidate Thursday in response to lower cutouts and the sliding lean hog index.
Cutouts were down $1.25 at noon at $109.50 and dropped nearly $11 for the week.
