Grains ended mostly higher, with livestock mixed on Tuesday.
Ag and financial markets all opened sharply higher Tuesday morning in what looked like a risk on day but new crop corn and soybeans and livestock were unable to hold the early gains.
Mike Minor, Professional Ag Marketing, says the tariff news was a bit more subdued compared to Monday.
However, all the markets are still watching tariff headlines and that is impacting money flow in and out of the financial sector as well as the commodities.
The soybean market seemed like it was able to shake off the escalation of trade tensions between the U.S. and China as President Trump has threatened another 50% tariff if Beijing does not drop its 34% retaliatory tax.
Corn and soybeans both saw bull spreading as the session evolved and Minor says that is an appropriate response to the uncertainty of tariffs as it is more of a new crop story, at least for soybeans which seasonally see China’s export business shift to South America.
Old crop corn demand has been strong and that is also indicated by the forward spreads and should be backed up by a lower ending stocks figure in Thursday’s WASDE report.
Wheat futures saw support coming from short covering and the market may be adding some weather premium, according to Minor, due to the recent flooding and frost event combined with lower winter wheat ratings at 48% good to excellent nationally.
Cattle futures started off sharply higher with the big recovery in the stock market but that buying faded throughout the day.
Minor says the cattle futures have been tied lockstep with the stock market and have had a big correction off the recent highs.
Will the cattle market be able to divorce itself from the financial sector and trade its own bullish fundamentals?
Minor says if the stock market is seeing a healthy and typical 20% correction and then recovers the cattle market will be able to hold together.
However, if the trade and tariff war extends past a few weeks and the stock market continues to trade lower the funds could exit their massive long position in the cattle market as well.
Lean hog futures also ended mixed after a strong start as that market continues to digest tariff news.
Increased Chinese tariffs are a concern but they only account for 7% of U.S. pork exports and so the market impact is more muted.
