Grain and livestock futures ended mixed on Wednesday.
Corn Sees a Technical Bounce
Chip Nellinger, Blue Reef Agri-Marketing, says corn futures closed higher on technical buying and short covering after holding chart support and the spreads even tightened.
“That’s impressive since we’re in the middle of harvest,” he says.
However, he adds the market is in a trading range.
“I do think that this $4.20 level above us is going to be pretty critical resistance. So for the time being, at least into mid-next week, it looks like we’re kind of stuck between $4.10 on the downside, $4.20 on the upside,” he says.
What Will It Take To Break Out of the Range?
Nellinger says the market is consolidating and moving sideways with the lack of fresh news and so he thinks data from USDA on export demand or yield would be helpful to provide direction.
“We need to get the government back opened up. We need to get a crop report or two that shows the trend of yield moving lower. Certainly mixed bag of results across the corn belt. There’s many pockets that are, you know, five to ten bushels below a year ago. And some of those are final yield reports. A lot of disease pressure,” he says.
Storage Crunch Coming?
Nellinger is concerned that with a record corn crop and more farmers storing soybeans this year that corn could see some price pressure as the last 20% to 30% of the corn is harvested.
“It’s going to depend on what the final yields are as to where that comes in, what price level that comes from. But certainly storage at the end of harvest is going to be an issue. And then we
He also points out there hasn’t been a lot of new crop corn or beans priced that will need to be dealt with over the next several months and that could apply additional pressure in the future.
“Certainly there is more priced than there was maybe two or three months ago. But at some point, especially as you get closer to the end of the year or maybe just after the new year in January, you could almost have like a second harvest type situation as producers turn unsold inventory into cash in order to pay for next year’s inputs. So it could get a little bit ugly here,” he says.
Soybeans Fade Crush and China News
Nellinger says the action in soybeans was disappointing as the market ended steady, giving up early gains.
Soybean oil was higher as President Trump’s threatened to ban Used Cooking Oil imports from China in retaliation for them not purchasing U.S. soybeans.
Plus, Treasury Secretary Scott Bessent confirmed that the meeting between President Trump and China’s leader Xi Jinping is back on after their latest trade fight, keeping hope alive for a deal on soybeans. Bessent told Fox Business News that President Trump will meet with China’s Xi at the Asia Pacific Economic Cooperation Summit in South Korea next month, despite their recent trade flare-up.
Soybean processors also posted a record crush in September with NOPA reporting 197.9 million bu. of soybeans were processed, up nearly 12% from last year.
Soybeans Traders Tired of Chasing Headlines?
Nellinger says the market is still trading headlines on China but soybean traders have gotten tired enough of the uncertainty and back and forth social media posts that they have stepped to the sidelines.
“I think the market’s still reeling from, you know, this, the Chinese situation here and the escalation that included rare earth minerals. It just seems like the funds decided, hey, I’m tired of the back and forth. I can’t establish a position that I’m comfortable with, whether it’s long or short, right?”
So he says the market may stay sideways until there is a decision one way or another about a China deal or soybean purchases.
A deal and purchases could produce a rally, while the lack of an agreement or China soybean buys could cause a significant selloff.
Lower Soybean Yield Can’t Offset Lower China Demand
And even lower soybean yields from USDA by one to two bushels will not offset the loss in China demand.
“Even if you lose two bushels ultimately on yields, they’re likely going to more than offset that with a Chinese demand drop on their exports there. So, but still, that could keep us stagnant or flat lining on carryout rather than, you know, surging to some 450, 500 million bushel plus carryout number because they come down on demand,” he adds.
Could Trade Aid Cause Farmers to Sell Soybeans?
Nellinger says the other risk is with a trade aid payment farmers could also decide to sell their soybeans in storage to avoid paying carrying costs.
Feeder Cattle Pause
After eight days higher and pushing into all-time highs again on Tuesday the feeder cattle futures finally took a break on profit taking and waiting for the cash index to catch up.
Nellinger says the market has been pushed by the red hot cash market but was overdue for a break but until cash slows down he says the market will stay intact.
Live Cattle Make All-Time Highs
Live cattle futures made all-time highs in the front months and closed higher with some early cash trade developing at higher money. Fed cash was reported in the North at $238 live, which is up another $3 from last week.
Lean Hogs See Short Covering
The lean hog futures saw short covering after December made new 7 week lows on Tuesday.
The market also stabilized according to Nellinger due to its discount to the cash index and stable cash and cutouts.
