Grain and livestock futures ended mostly lower on Thursday.
Grains Spiral With Lack of Bullish News
Grains markets were lower seeing speculative selling pressure on a lack of fresh bullish news according to Naomi Blohm with Total Farm Marketing.
She says the planting pace nationally is ahead of schedule and weather overall in non-threatening. “The market is continuing to focus on the probability of a decent sized crop.”
Plus, some dry areas of Kansas and Oklahoma got recent rains that were too late for the wheat but will help corn and soybeans.
Weekly corn export sales of 83.7 million bu. were strong but weren’t enough to spur buying.
Are the Seasonal Highs In?
December corn had a bearish key reversal on a the weekly corn chart last week according to Blohm.
She says, “So that is a technical signal that maybe for the short term, we’re in our seasonal high. And if you think back to the last five years and the summer high price for December corn futures, three out of the last five years, that summer high price has actually occurred in the month of May.”
So going forward, she thinks unless there’s a dramatic weather scare in July, or a flare up in the Middle East, the path of least resistance may be sideways to lower in the short term for the grain markets.
Technically she says December corn has been in an uptrend since August on a weekly chart. “And if we close, if the December contract closes below $4.75, then that would break the uptrend that we’ve been in and point closer to $4.50 as a downside target. So it doesn’t mean we’re going to go straight down.”
She adds the soybeans also posted a hook reversal lower on a weekly chart last week. “So for November beans, $11.75 support, then $11.50, then $11.25. It’s 25 cent increments. So you’re going to want to be keeping an eye on that.”
Funds Exiting Grains
The funds have been starting to exit long positions in the grain markets as well.
Blohm says coming into the end of a month and going into a three-day holiday speculators are going to the sidelines and booking profits.
Funds were near to record long in the combined grain market going into the China summit.
She says, “Like the second longest compared to after the Ukraine Russia war.”
China Disappointment
The market has also been disappointed with the lack of buying by China since the China summit.
“That is weighing on the ag space as well. I do think you know China is going to come in and buy American ag products they’re probably just
waiting until late August or early September when we find that natural harvest low price and then I think you’re going to see them come in and buy, but they’re business people too. And so they want to buy when there’s good value and when it’s on sale.”
She adds right now the U.S. is not competitive as South America is cheaper.
China Not Likely to Tip Their Hand
China is not confirming the $17 billion of ag purchases either because they don’t to tip their hand and drive prices up.
“They’d like to kind of stair step in with their purchases, but they do like to wait until the value is there. And I think it’s also interesting to point out that President Putin from Russia was in China earlier this week. So China is hosting a revolving door of global leaders. I think it’s a flex to President Trump to say that they’re going to do business as China with whomever they need to do business with.”
Watching Iran War Developments
She says the market is also watching the Middle East conflict and some traders may want to exit positions ahead of the three-day holiday in case the situation changes.
“Just be mindful of potential Middle East escalations. Be mindful of what could happen in the world on Monday when U.S. markets are closed.
There could be a lot of volatility on Monday night when the grain markets reopen and then into next week as well. And that’ll be the final week of the month. So there could be a lot of position squaring and that could affect markets prices as well, too.”
Wheat Story Over?
The wheat market also put in highs right after the May WASDE report shocked traders with the lowest crop since 1972.
However, Blohm says the market has digested that and will need to see more abandonment to feed the bull.
“I did hear today from a client in Kansas that they had a field that they thought that was going to be able to be harvestable and now as they’re getting closer to harvest they’re thinking that you know maybe they’re going to have to claim it for crop insurance as abandoned acres. They just don’t think it’s going to yield anything when they had hopes that it might. So I’m curious if we see more unharvestable acres on winter wheat.”
Still, she points out that funds are exiting longs and going short in the wheat and the market will also be battling the seasonal sell-off that occurs this time of year.
Wheat Bullish For 2027
Blohm is more of a wheat bull for 2027 as countries like Australia and Canada are already projecting lower acreage and production for next year.
“There’s things that are rippling around the world. Of course, the fertilizer conversation is still front and center. But there’s reasons why I’m getting more and more friendly for 2027. Something to keep watching, though, because that really could set us up. Wheat always leads those big rallies,” she adds.
Strengthening Dollar
She is also watching the dollar strengthen near par at 100 and when that becomes a factor in hurting exports.
“So for the past few months, you know, the value of the U.S. dollar had been lower and below that par level. And now we are starting to claw back higher. Part of it is just on the notion that we still have inflation that is higher and, of course, getting a little bit worse with higher fuel prices. But if the value of the U.S. dollar flips above that 100 or par level, that is really likely going to be weighing on U.S. ag exports just because the exchange rate, when the value of the U.S. dollar goes higher. It makes it more expensive for other countries to import our products.”
Cattle See Ugly Day, Limit Down in Feeders
Cattle had an ugly down day with feeder cattle futures closing limit down $9.75 in all but the spot month.
She says funds were liquidating longs on the technical damage done to the charts and the realization the cash market may have topped.
“So we had decent cash prices last week, but now this week it seems like maybe that holiday demand has been met for Memorial weekend and
prices are starting to drift a little bit lower. We’re seeing funds exit long positions,” she adds.
Plus Friday’s USDA Cattle on Feed Report is expected to be negative with placements at 104% of a year ago and on feed at over 101%.
Milk Market Falls Over $1
The Class III milk futures have also tumbled over $1 this week.
“Last week, the story of milk and prices were holding support. We had decent cheese prices. We’ve got decent cheese demand. Actually, exports for cheese for the month of March, which had been the most recent report that we got on exports that were up nearly 30%.”
So demand was supporting prices and absorbing the large milk production.
“But then at the end of last week and this week, all of a sudden cash cheese prices fell lower. We started to see the powder prices erase
a little bit to the downside as well. And that just capitulated and it just made that Class III market fall apart and a $1 loss in five business days is just exceptional,” she explains.
USDA is set to release a milk production report on Friday and it will be closely watched to see if production has risen again. That coincides with a monthly cold storage report.
“And that’ll just help us to have a better idea of what is in storage for cheese and butter. As inventories have been dwindling lower, we’re going to see if that trend continues or not,” she adds.
