Ag markets were mostly lower except for corn futures on Wednesday.
The strength in corn was attributed to short covering but John Heinberg, with Total Farm Marketing, says it was impressive considering wheat was making new contract lows.
He says corn is still building on last week’s higher weekly close and the contract lows have held. “The corn market is basically in consolidation mode here over the last seven trading sessions bouncing between $4.20 and $4.30 basically caught between the 20 day and 10 day moving average on that May contract,” he says.
Corn may also be seeing some demand surfacing according to Heinberg. If exports are decent Thursday morning and May can get a close above $4.30, he thinks corn could see some additional short covering before the WASDE Friday.
May Chicago wheat ended 20-cents lower, and the wheat complex was down for a second down day tied to technical selling. Both Chicago and Kansas City futures scored new contract lows. However, Heinberg says there was talk in the trade that China had cancelled U.S. wheat sales. “They may be walking away from some of their earlier soft red winter wheat purchases from back in the late fall. We’ll see if that is validated but the spreads may be telling the story, “ he says. Black Sea exports are also negative for the market, especially as Russia continues to undercut world prices and the U.S. is not competitive. Rain chances in the Southern Plains may have also added to the pressure.
Soybeans ended slightly lower despite higher soybean meal. Heinberg says while soybeans had a higher weekly close its hard to rally the market with Brazil harvest pressure keeping a lid on prices. He says at least the Brazilian soybean basis levels have improved verses U.S. prices. “Their premiums are significantly below the U.S. market but at least that gap is narrowing,” he says.
The grain markets are also positioning ahead of the Friday WASDE with South American numbers the main focus. “I think USDA will slow play those numbers and not give the market what it wants,” he says.
Cattle futures saw pressure in both the live and feeder cattle markets. Heinberg says the futures got too far ahead of the cash and are trading sideways waiting for the cash market to catch up. He says the reversal action yesterday in the futures is also a concern.
Nearby lean hog futures were down for the third day, seeing continued profit taking with the futures premium too large compared to the lean hog index and with softening cutouts. New contract highs were hit in July and deferred contracts Thursday before seeing a reversal and saw more profit taking and hedge pressure.
