For the week grain futures were all lower. March corn fell 13 ¾ cents, December corn was down 8 ½, March soybeans dropped 5 cents, November soybeans down 7 ¼, with March soybean meal losing $10.00 per short ton, but March soybean oil was up 253 points. March Chicago wheat loss just 3 cents, but March Kansas City wheat fell 23 ½ and March Minneapolis lost 15 ½. March cotton was up $4.44.
March corn made another new contract low on Friday after trading two-sided. Corn was pulled down by soybeans and soybean meal with better rain chances in Argentina and the fast start to the second crop corn planting in Brazil. Chuck Shelby, Risk Management Commodities, says, “The funds have continued to pile on. The funds know there is 50% to 60% of the corn crop that is yet to be priced by farmers and that corn will be coming to market in the next few weeks.”
Shelby is concerned that farmers will need to decide soon what to do if they have March basis contracts in grains. “We saw that in December. So, funds are aware that producers are either going to have to roll or make a sale as they come into the next couple of weeks.”
Soybeans also saw profit taking after a higher day on Thursday, with lower soybean meal and the improved weather forecast in Argentina. “We saw a flip in the pattern. Argentina had been hot and dry and now they’re going to receive some moisture. Brazil was getting rain and now are getting a welcome break,” he says.
Shelby also believes the grain market is bearish heading into USDA’s Ag Outlook Forum next week as it is likely ending stocks will be well above this year even with acreage adjustments. “If they come down to 92 million acres and a trendline yield of 183 bushels. You are going to take the carryout of 2.17 billion from this year and you can expect a jump in the coming year to 2.6 to 2.7 billion bushels,” he says.
For soybeans, Shelby says USDA could increase acreage by 1 to 2 million acres and use a yield of 52 to 53 bushels per acre, which could put ending stocks over 400 million bushels. “It will be interesting to see if USDA uses the higher demand for soybeans for biofuels in their calculations.” he says.
Wheat ended mostly higher with short covering and a softer dollar.
Shelby says the Middle East conflict and Red Sea shipping issues seem to have really accelerated the bearishness of the funds and increased selling pressure in the entire grain complex. “The only hope is the speculative traders take profits at the end of the quarter and ahead of USDA’s Prospective Plantings report.”
Cotton makes new highs for the move on Friday and was up for the week on tight supplies and a 7 year low in ending stocks in this week’s USDA Supply and Demand Report. Plus, the market is bidding for acres. Shelby says prices for new crop cotton will need to run to 85 cents or above to swing any acres.
For the week February Live Cattle gained $4.07 ½, April Live Cattle up $2.97 ½, March Feeder Cattle were $2.35 higher, April gained $1.57 ½ and February Lean Hogs lost $1.77 ½, April was down $2.67 1/2.
Live cattle extend gains despite the lack of cash, which developed after the close with Southern trade at $182, up $4 and northern dressed prices mostly $285, up $6 but with a range from $280 to $289. Feeders were lower on profit taking. Shelby is optimistic about cattle with strong fundamentals including tight supplies and that will keep the trade buying on any breaks.
Hogs bounce after several days of the market being in profit taking mode. Shelby says, “I think the best news for hog prices in higher cattle prices.” He says the demand for pork will also be higher as the available supplies of beef continues to shrink.
