Grains Mixed Trading Weather, Awaiting Reports: Livestock and the DOW Fall after CPI Data
Markets Now Closing Markets 4-10-24 Video
Grains end mixed, livestock and equities lower.
Mark Schultz, Northstar Commodity, says wheat rallied Wednesday as traders were putting in weather premium on hot, dry and windy conditions in HRW areas of the Southern Plains.
Weather is an issue in Russia as their crop is facing some dryness. which he says is important as they've been undercutting the world wheat market. A hiccup in their supply might help improve export demand for U.S. wheat. Plus, Russia has had some wheat export issues due to poor quality.
However, Schultz says he thinks the technical picture for wheat is improving. "I believe it's now three or four of the last five weeks that we started to close higher than the opening on a weekly basis." He says a close in July KC wheat above $5.95 - $6.00 could cause funds to cover short positions.
Corn ended higher on the heels of the rally in wheat as Schultz says weather is not supportive. "If you look just at weather its neutral to slightly bearish. It looks like you're going to be planting crop in at least the Western Corn Belt later this week. I think you're going to see when it gets warm and dry like this farmers plant additional corn acres, so 90 million acres is too low," he says.
Schultz says the South American crop size is the key for the corn market. He says there have been some crop problems in Brazil in the second crop corn but recently Matto Grosso has seen some better weather. So, it will take a change back to hot and dry for that crop to get smaller.
Soybeans were lower for a second day setting back with meal. "We're crushing more beans, so we have more meal. Argentina farmers are starting to harvest, and the Argentine government will be moving meal into the world market in another month so our business for meal is going to dry up," he says.
All of the grains are gearing up for USDA and Conab production estimates Thursday. Is there anything in the reports that could break corn or soybeans out of their trading ranges? Schultz says it will take pretty large production cuts in Brazil for the market to rally with the large carryover in the U.S.
Cattle set back with a lower stock market and Schultz says there has been a shift in demand from beef into pork. That combined with higher carcass weights and increased beef imports is pushing up overall production. "We're feeding to record weights, we're 30 pounds above a year ago and that extra weight is equivalent to 3.5% more beef on a weekly basis. So, we may be killing 5% less cattle, but production is down only 2%," he adds.
Lean hog futures saw profit taking Wednesday after new contract highs on Tuesday and a nearly $7.50 jump up in the cash market. Futures scored a bearish key reversal in the process. So, is the top in? Schultz says it is very likely and so he suggests putting some hedges in place in the summer month futures.
