Grains end mixed Thursday, with a sharply higher close in cattle and milk futures.
Naomi Blohm, Total Farm Marketing, says grains markets suffered from a lack of news and pre-holiday positioning.
Wheat ended mostly lower seeing some profit taking as the market has seen a 50-cent rally off the lows and ran into chart resistance on Thursday.
However, Blohm says the wheat market has been adding some weather premium.
“For wheat we’re keeping an eye on global weather. So things in the Black Sea region continue to be on the drier side. The wheat conditions in China, also on the drier side, and we saw that when China bought some wheat a couple of weeks ago from Australia and Canada. And while we know the US has the potential for this fantastic crop, we are still hearing about the concerns in the Kansas wheat crop with the disease there,” she explains.
Weekly exports were strong for new crop wheat at 32.4 million bu. which Blohm says helped pull wheat off its lows for the day.
Corn has also been higher for the week with growing concerns about weather.
Planting delays in key growing areas of the Corn Belt are starting to catch the attention of traders especially with tight ending stocks.
“Traders seem focused on the remaining 26% of the corn left to be planted in Illinois and the nearly 60% left in Ohio,” she says.
Others are looking farther ahead at hot dry forecasts in the extended weather models.
“And actually when we saw the NOAA weather forecast come out and say hot and dry temperatures for July and August, that’s when the corn market started to pick up with prices. And we saw fund traders buy back some of those short positions that they had established,” she says.
Blohm says corn demand has also been strong on both the export and the ethanol production fronts.
July corn finally crossed the 200-day moving average but now the market faces another layer of chart resistance.
“On the charts, we’ve got corn prices right back tiptoeing into that long -term uptrend that was established from last year in September. July corn just really trying to climb higher while December corn is back in that uptrend line,” she says.
What will it take for the grain markets to get through the next technical levels?
She says weather will be a big part of the equation, but the market will also be watching demand and movement on trade deals.
Soybean ended slightly higher on the day and are also watching weather, in addition to China trade progress and the direction of biofuels policy.
Cattle futures rallied on the heels of more record cash and higher boxed beef values, plus strong weekly exports of 12,300 metric tons.
Blohm says the futures are trying to negate the bearish key reversals but the key for the market being able to retest the all-time highs may lie in USDA’s Cattle on Feed Report out tomorrow.
Wednesday’s light cash trade at higher money helped to push the market and bids continued strong through the session.
Milk futures tacked on gains for a second day.
June Class 3 milk futures were up another $.30 Thursday and have made a nearly $1.00 run in the last two days.
She says the USDA milk production report was slightly bearish, showing higher production by 1.5%.
So, she points to the higher cheese prices tied to strong export demand as the source of the rally.
