Grains eased on Tuesday on profit taking after running into some chart resistance and markets were overbought and due for a correction.
Bryan Doherty, Total Farm Marketing, says there was also some farmer selling as some rewarded the market after the recent rally.
The Biden Administration also announced $18 billion of import tariffs on Chinese goods. While the list didn’t include agricultural products there was fear of retaliation and soybean oil plummeted after used cooking oil was not included in the package after rumors the feedstock would be part of the levies.
Conab also released their Brazilian crop estimates and with an increase in acreage the crop size increased instead of decreasing. Soybean production was pegged at 147.7 million metric tons, up 1.2 mmt and corn was estimated at 111.6 mmt.
“I think the market is getting a better handle on the soybean production losses from the flooding in Southern Brazil. Initially the thought was 4 to 5 million metric tons of loss but now the market sentiment is around 1 to 2 million,” he says.
Wheat also saw some profit taking running into long term chart resistance, but Doherty says the weather story there is far from over. So, the market should be well supported on breaks.
Corn followed soybeans and wheat lower but was supported by planting delays in the corn belt. However, Doherty says in order for the funds to continue to cover their short positions the market will need a bigger weather story.
Class 3 milk futures rallied into new contract highs Tuesday and then corrected and scored a bearish key reversal lower. Doherty says this may be signaling some sort of top in the market and warrants producers doing some hedging at these prices. Futures have rallied more than $5/cwt from their lows at the beginning of April.
Cattle also had a strong close Tuesday on the heels of sharply higher boxed beef values. Doherty says the nearby live cattle futures closed above the 100 day moving averages but are still in a sideways trading range. So, he’s not sure if the market can build on this momentum.
