Grains fall after a higher opening, with cattle sharply higher and hogs under pressure.
Mark Knight with Farmers Keeper Financial says grains are higher on news of a productive call between President Trump and Chinese President Xi and traded both sides following that.
After a 90 minute call between the two leaders President Trump said trade officials from the U.S. and China will be meeting soon at a to-be-determined location.
Trump said the it was a “very good” call between the two leaders and focused “almost entirely” on trade, Trump said on Truth Social.
Knight says movement would be good as the grain markets are getting tired of the lack of progress on trade deals not just with China but the list of countries currently in negotiations.
“Really, the only deal we have is with the UK and that’s not even a deal its just a framework,” he points out.
Grains had seen short covering by the funds the last couple of days as the markets got oversold and with some hot dry weather in the extended forecast forcing traders to add some weather premium.
However, the markets have struggled technically getting above key resistance areas and without any bullish headlines Knight says the markets are drifting.
Exports this morning also show that sales are starting to fade with corn at 37 million bu./6.3 new, soybeans at 7.1 million bu. and wheat at -1.8 million bu old crop and new crop at 16.3 million.
Corn exports though are still 27% ahead of last year and Knight thinks USDA will need to raise their export projection in next Thursday’s WASDE.
The July corn contract has been seeing signficant pressure despite that, in addition to bear spreading and Knight says that is a function of South America’s cheaper and near record corn crop.
Live cattle made new contract highs on the open chasing some higher cash in the South yesterday. Light business took place at $225-$228, up $3 to $6 from last week.
With the discount the futures are holding to the cash that forced some early buying and with the gap between the two Knight thinks the futures will need to continue to move higher.
Fundamentally, I don’t see a reason for the market to fall apart either says Knight, with the likelihood of rapid expansion not in the cards.
