Grains are higher early Wednesday, with livestock mixed.
Chip Nellinger, Blue-Reef AgriMarketing says the rally in the grains is being led by corn which made some new highs for the move trading concerns about South American weather.
Argentina continues to look dry and although there are rains in the forecast next week the amount may not be enough to stop the yield damage that is occuring.
The other concern is areas of central Brazil are getting too much rain which is slowing soybean harvest and that is also delaying the planting of the second crop corn in Brazil.
“Corn is a bull market right now and continues to see fund buying on the breaks and we are back making new highs for the move,” he says.
The key will be for March corn to close above the recent high of $4.95.
That strength is pulling up the rest of the complex, although Nelliger says soybeans have been a more reluctant follower with the competition from Brazil’s lower priced crop hampering enthusiasm in the market.
Soybeans also got stopped out last week around the 200 day moving average resistance on the charts and will need to close above that level to keep funds interested.
Wheat is also following the rally in the corn market and funds are covering some of their large short position as it is end of month.
The key for a sustained rally will be if the wheat market can start to become concerned about the Russian crop losses due to drought.
Russia is seeing higher wheat prices and is curbing exports but the market has been shrugging off the news.
Cattle futures are taking a break early in the session in what looks like end of month profit taking.
However, Nellinger says until the cash market breaks he thinks the futures will be able to absorb corrections and rebound.
So far there is no indication that beef prices have gotten high enough to ration demand which is also positive he says.
Plus, cattle should get additional bullish news in this Friday’s Cattle Inventory Report.
Hog futures followed cattle initially but then rebounded with strong cash.
