Grain end mixed on Friday with cattle and hogs mostly higher.
Don Roose, U.S. Commodities, says grains had a quiet day as May contracts were consolidating around strike prices as it was option expiration.
However, soybeans still made new highs for the move before setting back and July still held above the 200-day moving average.
“I think when you look at it chart wise, we did breakout to the upside over that flat top that we had, what were we in like eight days of a 20 to 22 cent trading range.”
Some de-escalation of the China trade war was evident as China says it plans to exempt some U.S. imports from its 125% tariffs and is asking firms to identify critical goods they need duty-free. Reuters reported a commerce ministry task force is collecting lists of items that could be exempted from tariffs and is asking companies to submit their own requests. Beijing has not yet communicated publicly on any exemptions.
Roose says if the trade tensions ease between the U.S. and China and tariffs fall the grains will continue to rally on the news and $5 corn and $11 soybeans may be in the cards.
The seasonals are higher for the next few weeks in the grains and that is the mostly likely timing for that move he says.
Plus, demand has been strong for soybeans as other countries have stepped in to buy in China’s absence and old crop corn exports are still running nearly 30% ahead of last year.
So, Roose thinks USDA will need to raise soybean exports in the May WASDE.
“It’s possible that our export pace could be up 20, 30, 40 million bushels. So your ending stocks report to report could go down again,” he adds.
Weather continues to be a focal point for the grain markets and in the case of corn some heavy rains in parts of the Corn Belt and more in the forecast have slowed planting.
However, the forecast is more open to start May which may pressure new crop corn.
Wheat has also been seeing pressure from the rains that have fallen and more in the forecast in hard red winter wheat areas.
However, Roose says after pushing hard red winter wheat contracts back to contract lows he thinks that has been priced into the market.
Cattle ended mostly higher, with various contracts making new contract highs again in both live and feeder cattle on fund buying and higher cash.
Cash developed late Friday in the South at $212-$213, up $2-$3. Northern trade was mostly $342-$343 dressed, up $5-$6 and $215-$218 live.
Roose says demand has continued to be strong for beef as well.
Lean hogs rallied on higher cash and cutouts, plus strong demand with evidence from the monthly cold storage report showing a 9% lower inventory compared to a year ago.
