Grains try to build on yesterday’s higher closes, while livestock are mixed early on Wednesday.
Dave Chatterton, Strategic Farm Marketing, says the funds have continued to cover their short position in the grains with strong technical signals.
The dry weather in the Corn Belt and talk of lower soybeans yields has helped.
Plus, demand has been picking up with notable Chinese purchases of soybeans.
However, he thinks the markets would need to see a bigger pickup in demand especially from China and a sizable decrease in yields to move the needle substantially on price or get the funds to liquidate their entire short position.
Additionally, he’s not sure how much farther grains can rally ahead of the WASDE next Thursday and with a pick up in farmer selling.
While the U.S. is competitive with Brazil on corn and soybean prices right now, he is watching that advantage slide with low water levels on the Mississippi River once again.
He says, “If you look at the river projections on that Memphis gauge for the Mississippi River its scheduled to go down another two feet over the next two weeks. That’s going to take us very close to those record low levels from last year. that’s pushing barge freight up at a time we’ve seen the futures market rally and doing so we’re getting a little bit less competitive.”
Dry conditions in the Brazil are also slowing planting efforts for first crop corn, and soybeans will be starting soon, and if that continues it could create some production problems in that area.
“I think we’re watching what’s happening in South America with the dry pattern so far in Brazil although its early. if that extends and they delay their soybean planting we have something to deal with.”
Chatterton says they are also getting reports South American acreage expansion may be slowing for the 2025 crop.
“We’re really expecting kind of a flat year in Brazil, maybe some very modest growth but maybe one percent, likely less than that. that’s a new phenomenon. we’re used to this kind of two, two and a half three, three and a half percent growth a year and that’s reflective of the economics of the situation on the farm currently. In Argentina you know we’ve all seen the stories about a switch, 5 million hectares moving out of corn, likely into soybeans.”
Cattle are consolidating after a higher day yesterday and despite strong boxed beef values.
Lean hog futures continue to see managed money buying with some help from stronger cash and cutouts but he thinks the rally may be about to run out.
