Corn and soybeans are higher early Wednesday with wheat sliding. Cattle are lower, hogs higher.
Corn Tries to Bounce
Corn futures were slightly higher to start Wednesday in tandem with soybeans. Vince Boddicker with Farmers Trading Company says some of this is short covering or corrective buying as the market was oversold following two days of fund selling. So has the market fully digested the bearish news from Monday’s USDA reports? He says its too early to tell but at least the lower prices stimulated some export demand as South Korea bought 5.35 million bu. of soybeans on a flash sale this morning.
August Lows Need to Hold in Corn
Boddicker says the key to whether or not the funds are done selling is if corn can hold the August lows. March put in a contract low of $4.10 on Aug. 12 and that needs to hold or the market could target $4.00 as the next support area.
Soybeans Also Try to Recover
Soybean futures were also higher early on Wednesday on short covering and corrective buying after the big two day slide. That market has not only been absorbing the extra 60 million bu. USDA added to ending stocks but Boddicker says the market was concerned about the 25% tariffs that could possibly be placed on countries that traded with Iran which includes China.
Market talk on Tuesday had China booking another four to five cargoes of U.S. soybeans and USDA confirmed 12.3 million bu. in a flash sale on Wednesday morning. Estimates now put China at 11.5 MMT, so very close to their 12 MMT commitment. However, Boddicker says the key will be if China continues to buy any U.S. soybeans after that. “I doubt China will buy beyond that level as Brazil’s record crop will be coming on line,” he says.
October Lows Need to Hold in Soybeans
For soybeans the critical benchmark that needs to hold in the October lows according to Boddicker and for March that would be $10.28. For him if those areas don’t hold the market could retest the $10 mark.
Wheat Slides Further
Despite higher corn and soybeans and a lower U.S. dollar, the wheat market was sliding again on Wednesday. Boddicker says the market is just trying to digest the large global stocks which USDA raised again on Monday by another 3.4 MMT. So far most of the major producing countries have had record or near record crops. Plus, winter wheat acreage did not drop as much as was expected. So unfortunately he says the only pops in the market may be on fund short covering and those technical recoveries will be difficult to sustain.
Cattle Consolidate Awaiting Cash
Live and feeder cattle futures are consolidating after the big rally on Wednesday. While feeder futures have continued to make new highs for the move the live cattle futures got stopped out again at last week’s highs and so they are seeing some profit taking. Boddicker says the live cattle futures are also waiting for cash trade to provide direction and higher prices will be needed for the futures to be able to take out those overhead resistance areas on the charts.
Bull Flag in Feeder Cattle Futures Projects Higher
For feeder cattle futures Boddicker says the market has a bull flag formation that could project $20 to $30 higher. However, even with the strong cash trade at the sale barns he doesn’t think the market will be able to retest the highs. “The psychology of the market has changed with the Trump administration’s plan to lower beef prices and that will keep the big money investors from plowing back into the cattle futures like they did last fall,” he explains.
Lean Hog Futures Advance
Lean hog futures are slightly higher for a second day as the market is seeing some short covering. However, the futures are at a premium to the declining cash index and that may limit additional recovery he says. Seasonally the market is also a big weaker in this time frame.
