Grains end mostly higher to close out the week with pre-holiday trade and holding risk or weather premium says Garrett Toay, AgTraderTalk.
“Today’s action had a very holiday trade feel to it,” he says.
Weekend forecasts look wet for much of the Corn Belt and there has been reports of heavy rains and flooding this week including prime growing areas in Iowa. While Toay isn’t concerned about Iowa getting planted he says, “Iowa yield does better in dry years verses wet years but that’s not an argument I’m willing to get into on May 24.”
Not much has changed regarding the global weather concerns the market has been trading either.
Toay says, “This Russian wheat drought, this Russian wheat frost has caught the attention of the institutional trades and they’re going to drive the trade and wheat could continue to rally.”
However, he says, the wheat corn ratio is trading at its highest level since Russia invaded Ukraine and has softened after it keeps correcting it could signal a top.
Many of the markets continue to run up into chart resistance and Toay points out that corn has been a reluctant follower of the wheat market as it has rallied due to farmer selling.
“Last time we had July wheat trading $7, corn was pressing $4.75 and we’re still about a dime away from there right now. Managed money is covering but it’s being offset by farmer selling,” he says.
Soybeans saw bull spreading with the old crop leading. “There’s talk of China has bought a couple of cargoes of old crop beans off the Pacific Northwest this week, sounds like they bought some cargoes from Argentina,” he says.
Yet, Toay is concerned about overall demand with the NOPA crush reporting showing a slowdown and exports are still tracking behind a year ago, but he also says Brazilian bean basis has firmed indicating a smaller crop. That’s making the U.S. more competitive.
Cattle traded mostly lower ahead of the Cattle on Feed Report despite some record cash trade in the North. “The front end of the cattle market has struggled with $184. It has been a brick wall,” he says.
Hogs made new lows for the move but is a bottom close? Toay says there has been chart damage and funds have continued to liquidate so support has been tough to find.
