Grain futures were all higher early Thursday as well as hogs, with lower price action in cattle futures.
Grains Bounce as Argentina Reinstates Its Export Tax
Sam Hudson with Corn Belt Marketing says grains saw an early bounce on Thursday with news overnight that Argentina had reinstates it’s export tax on grains, which is at 26% for soybeans.
The government said in three days it had raised their goal of $7 billion in revenues allowing the tax to go back into place on Thursday.
In the meantime news reports indicate China had bought upwards of 35 cargoes from Argentina, equating to nearly 2.7 MMT of soybeans.
Unfortunately that may fill China’s needs through November.
Weekly Exports Solid
Weekly exports for corn were also helping support the market as they came in at 75.7 million bu. for the week and total sales commitments now stand at 1.104 billion bu.
Hudson says this is nearly a third of USDA record export forecast of 2.975 billion bu. and its only the third week of the new marketing year.
Wheat exports were also strong at 19.8 million bu. with total commitments now at 501 million bu. up 24% from a year ago.
Soybean exports were decent at 26.6 million bu. for the week, but there was no China business reported. The total for the new crop marketing year is also at only 404 million bu. which is down 37% from a year ago.
$10 Price on Soybeans Vulnerable Without China Purchases?
Hudson says if China does not come back into the U.S. export market soon he thinks USDA will need to lower their export forecast of 1.695 billion bu.
China said they would buy U.S. beans if the U.S. drops its tariff but sent a strong signal this week they aren’t going to buy U.S. soybeans with their large purchases from Argentina.
While soybeans held $10 this week even with the bearish export news, he says that price could be vulnerable without China business materializing soon.
Corn Yields Lower: When Will Corn Rally Above Resistance?
Hudson says yield reports they are getting in his office indicate lower yields on corn than a year ago, especially in Illinois.
That should drop the average yield but he says the market is still trying to absorb a record crop.
So that and farmer selling are limiting the corn market from getting above key resistance of $4.25 and then the July 7 gap area of $4.32 3/4.
Continued lower yield reports combined with the strong corn demand should eventually allow corn to get through those chart areas, but Hudson says its a grind.
Wheat Stuck
Wheat futures are also higher on Thursday following corn and soybeans but have been unable to really put in a definitive bottom.
Hudson says the market is stuck.
Export demand has been strong but the U.S. needs to be at these lower prices in order to compete with the large global supplies.
Cattle Continue to Consolidate
Live and feeder cattle futures were seeing additional profit taking on Thursday as live cattle contracts took out key 20-day moving averages on Wednesday.
That market hit chart resistance and consolidated as it has priced in the most bullish news regarding New World Screwworm.
Pressure is also coming from lower boxed beef values and so the market will need to see higher cash trade to continue to recover.
Lean Hogs Higher Ahead of Report
Lean hog futures are back higher on Thursday with funds returning to buy on strong technicals, as many contracts are hovering around contract highs.
Price direction will be determined by Thursday afternoon’s USDA Hogs and Pigs Report.
