Grains and cattle recover Friday with hogs lower.
Naomi Blohm, Total Farm Marketing, says after an ugly down week grains tested and held major technical support areas and saw technical and corrective buying.
“We tested key moving averages or those August low prices and with support holding that gave courage to traders to come in as buyers either new on a spec trade or people who had been sellers earlier in the week started to exit those positions and buy them back,” she explains.
Soybeans also got support from a record NOPA crush figure at 199.9 million bu. and news China is ending its export tax on goods like Used Cooking Oil, which will make it more expensive to import into the U.S.
She says exporters are front loading purchases with uncertainty about tariffs after January 20 but more so because grains prices are at value levels for end users with corn around $4 and soybeans around $10 and wheat in the $5.50 area.
“I think we’re going to see exports just plug away,” she says.
Domestic demand has been strong especially for corn with record ethanol production this week and record soybean crush for the month.
She says the pressure in the grains this week came from the stronger dollar and uncertainty about tariffs and a trade war under the new administration.
Funds have not really committed to be long or short the market so she thinks they are waiting for less uncertainty in the market as well.
Blohm thinks the grain markets can build strength from here as there is a seasonal tendency for corn and soybeans to rally from Thanksgiving to Christmas so she thinks there may be some opportunities for a rally.
“I looked back at the last decade between Thanksgiving and the end of the year. The average rally for March soybean futures is 90 cents, although the exact timing can vary,” she says.
She says the South American weather can sometimes fuel that rally.
Corn has the same seasonal tendency she says.
“The average rally for corn during that same time period is 33 cents over the past decade.”
Blohm advises producers to make some cash sales or do some forward pricing when that occurs.
Cattle also saw a short covering and profit taking heading into the weekend.
The December live cattle contract is under the 100 day moving average but February is setting right on that chart level and needs to hold for the funds to defend their long positon in the market.
Meanwhile lean hogs continued to see topping action with lower cutouts.
