Grains and hogs close lower, with a mixed day in cattle.
Dan Basse, Ag Resource Company, says grains closed mostly lower on Tuesday with selling tied to risk off reduction by managed money traders ahead of the end of the month.
Basse says,” The longs are concerned about that report at the end of the month. And they also want to take profits heading into the end of the month and end of the quarter. So we have that confluence, if you will, of all three and April 2nd, then is reciprocal tariffs.”
Traders are concerned about the increase in corn acreage which Basse thinks could be 94 to 95 million or more.
He says, “And that’s the kind of thing that has them on their heels and at least cutting their long position, which somewhere at the end of last week was around 150 ,000 contracts. So there is still some additional liquidation to work through.”
Basse also thinks the quarterly stocks could be bearish for corn with more sorghum being ground at ethanol plants and better feed and ethanol conversion rates due to the dryness of the corn at harvest.
With these bearish headwinds he thinks the February highs in corn and soybeans could be the highs for the year.
“You know, I would say that that was the high unless we really step in the weather problems either in Latin America with the winter corn, the Brazilian winter corn crop, or maybe something in the United States in terms of drought as we get into the major time frame,” he explains.
Soybeans also saw a slightly lower day along with corn and some South American harvest pressure.
However, Basse says soybeans have not seen the kind of pressure one would expect with the record crop in Brazil because their basis levels have actually increased due to strong demand from China.
“If I look at Brazilian FOB soybeans today, they’re trading about $1 over. The U.S. Gulf is around 75 cents over. So in the July period the United States is competitive again,” he says.
President Trump is talking about a meeting in June with President Xi of China and hopefully they will get something resolved before our next export season says Basse.
After the big day on Monday, wheat consolidated and Basse says it may have enough weather premium priced in for now but also ran into chart resistance.
Cattle futures ended mixed after more all-time highs in feeders.
Basse says the feeder futures can continue to stay strong with the lack of imports from Mexico.
“We’re now bringing about 4 ,000 head across the Mexican border each day. We still need to bump that up closer to 6 ,000 head if you’re gonna see a bear decline in feeder cattle prices,” he says.
Meanwhile, the live cattle market may have higher cash priced in and saw some spillover from the lower stock market and ahead of the Cattle on Feed Report.
Lean hog futures set back on profit taking, also hitting chart resistance.
