Grains open lower with new contract lows in corn, MN and KC wheat. Cattle also lower, with a bounce in hogs.
DuWayne Bosse, Bolt Marketing, says grains are seeing more fund and technical selling and positioning ahead of USDA’s Ag Outlook Forum with anticipation of higher ending stocks. For corn the market is expecting acreage to drop by 3 million acres, but with higher yields the ending stocks could still swell to near 2.5 billion bushels. He says long term support in the March contract at $4.25 is the next area he is watching and if that is violated corn prices could drop to under $4. “I think if we got to around $3.90 you would finally see some of the long time bulls finally pitch in the towel, " he says.
Wheat is dragging down corn but is also seeing technical selling, the hangover from a rally in the dollar and word that Russia is going to increase their export quota by 4 mmt. Ukraine also has 50 mmt of grains in surplus they want to unload and a majority is corn and wheat.
Soybeans bounced off new lows for the move, holding long term support in the March contract at $11.75. Soybeans saw fund selling pressure overnight and early as the March contract failed to get through chart resistance on Tuesday at $12 and is retracing. However, the market is also anticipating a 3 million acre increase on soybeans from USDA and an increase in ending stocks to 420 million bushels.
Cattle continue to see profit taking and consolidation, but Bosse thinks the packers could also be pressing the market. “They may be trying to get some of the weak longs out of the market so they don’t have to pay up for cash this week. Although I am not sure they will be successful in that,” he says.
Hogs are higher as traders unwind spreads with cattle and with some buying in anticipation of strong weekly exports and maybe even some China business.
