Grain and livestock close mixed Wednesday.
Alan Brugler, President and managing partner of A&N Economics, LLC says corn started higher Wednesday on technical buying as the market was still digesting the bullish 200 million bu. cut to ending stocks in the December USDA report.
However, nearby corn contracts ended slightly lower after failing at chart resistance and seeing some profit taking.
“We’re running into resistance at the October high in the March contract at $4.52 1/4 and we have more resistance at $4.56. So, we’re getting into a little harder area to chew through but you did have a nice breakout above the 2/3rds speed line earlier in the week and got a nice move after the USDA report on Tuesday,” he explains.
He says the market is a little overbought, but he thinks corn will eventually take out these chart levels with higher demand.
“You’re seeing some strong ethanol demand, you’re seeing very good exports for the first quarter and into the second quarter,” he says.
Plus, he says the U.S. is only game in town for corn globally for the next 30 to 60 days.
“U.S. corn ending stocks are also now below last year at the 1.738 billion bu. level and so the funds are going neutral to slightly long and will not push the short side of the market as a result,” he adds.
Soybeans ended higher with some corn soybean spread unwinding.
January soybeans were unable to take out resistance at $10. However, Brugler says the March contract has had good chart support at the $10 level and that may hold until the record South American crop is confirmed which won’t be until after the first of the year.
Upside may be limited though unless they have a weather issue in the Southern Hemisphere.
Wheat futures extended gains on short covering and tightening global stocks.
He says global stocks have dropped nearly 16 MMT over the last two seasons and there are concerns about Russia’s crop which is adding support.
Live cattle futures made new highs for the move with higher cash in the North at $192-$193 and mostly $300 dressed, up $3 from last week’s weighted average in Nebraska.
He says nearby live cattle contracts took out the highs from October and look poised to test the contract or all-time highs from September of 2023.
“If cash continues to stay strong we could push over $200 as we aren’t seeing a turn in the cattle cycle yet,” he says.
Lean hog futures continue to consolidate on profit taking and long liquidation by managed money traders who are record long, as well as hedge selling by producers.
