Ag markets end mostly lower with spillover from the risk off day in outside markets. The exceptions were fractional gains in corn and a rally in cotton.
Alan Brugler, Brugler Marketing says the stock market plunged as the CPI data came in at 3.1% and that was above expectations which resulted in a rally in the dollar index. “A strong dollar today doesn’t help exports,” he says.
The market ignored another lower private estimate for Brazil soybeans at 147 million metric tons. Brugler says those firms are getting ahead of USDA, so the market is waiting for confirmation of lower yields. Plus, the weather continues to be favorable in South America and Brazil’s soybean prices are well below U.S. soybeans at the Gulf, so prices have been falling to find a place to attract export business.
Brugler says, “We don’t have much to work with fundamentally in soybeans. We’re still getting over the crop size in Brazil but you’re seeing more rain in the forecast, which is helping the later planted beans, it’s helping the Argentine crop as well. And so, you do tend to put more emphasis on the speculative money flows and today’s story was still most of the money going to the stock market, but we had a little glitch in the morning when the CPI numbers came out.”
Technically, soybeans also saw profit taking after hitting chart resistance in the March contract just below $12 and soybean meal was also a drag on the soybeans.
The wheat market also fell in response to the higher dollar and the lack of demand in the market.
Corn held fractional gains for a second day but is not far from the Monday’s contract low. Brugler says he can’t call a low in the corn market without some sort of a catalyst, “And at this point I don’t know what that might be especially with the funds short over 300,000 contracts in the corn market, the 4th largest short position in history.” However, they could get out of those positions in a hurry with a problem with the planting of U.S. corn this spring or a problem with the second crop Brazil corn, which is already being forecast well below last year’s production.
Cotton was sharply higher and erased nearly all of Monday’s losses. Brugler says the cotton market is reacting to tighter available supplies. “You’re under 3 million bales on ending stocks and you have questions about 2024 acreage, so the market is bidding for some acres. The dicamba court decision could also mean fewer acres of cotton or result in a yield hit.” However, the December contract continues to trade under 85 cents which is not attracting any acreage for 2024.
Live and feeder cattle futures both saw profit taking but Brugler says this is a healthy correction. “This is definitely still a bull market especially with the tight inventories. Plus, we were up against some major resistance on the charts,” he says.
