Grains were higher early Wednesday except old crop soybeans, livestock were lower.
Soybeans Try to Find Footing
Soybeans were mixed early Wednesday with the market still trying to find its footing after the limit down closes in old crop contracts on Monday in response to the China summit delay and China talking about looking for other non-soybeans row crop purchases from the U.S.
Brady Huck from Empower Ag Trading says, “After the volatility that we’ve seen over the last couple of weeks, sometimes these markets just need to find some stability afterwards. And we’re trading a lot of headlines right now. Beans are trying to find some stability, kind of retraced about 50% of the January to to recent February highs so we’ve given some of that back but looking for some stability,” he says.
Will Soybeans Build China Premium Back In?
President Trump confirmed Tuesday he was delaying the China summit but only for five to six weeks, which is helping the soybean market. However, will soybeans try to build back premium heading into that meeting?
“I mean, we push this date five to six weeks but in a week or two that date can change again. So will it happen or won’t it happen? We can trade that five or six times between it actually happening here going forward. So beans, you know. There’s just a lot going on here, and we’ll see what transpires, I guess, Michelle. It’s hard to outguess what’s going to happen with that meeting and where it goes,” he explains.
Bean Oil Rallies on Biofuels Meeting Headline
The soybean oil market was also up sharply Tuesday and saw follow through buying on Wednesday also in recovery mode after the limit down closes on Monday.
However, the market was also trading news the President will be holding a meeting at the White House to celebrate agriculture, which is expected to include biofuels interests. So, the market is anticipating favorable RVO levels.
Huck says, “So anytime we can get more biofuel production or usage of American ag products for biofuels using soybean oil. Those are good things.”
November Soybeans Buying Acres?
November soybeans were up Wednesday with the market looking like it was trying to buy some more acres according to Huck.
Allendale was the first out with their survey results showing MORE soybean acres compared to last year at 85.569 million but the market looks concerned that may not be enough. “New crop is trading higher this morning and that we’ve got the planting intentions report at the end of the month and Quarterly Stocks. I respect that those intentions numbers there’s a lot that has changed since they’ve taken that survey and a lot will change going forward. I think there’s a lot of flex acres that could still change hands yet between now and when they actually go in the ground.”
Corn Higher With Wheat, Lower Acres, Crude Oil
Corn was higher early Wednesday with help from the rally in the wheat market and the lower corn acreage with Allendale’s survey confirming a cut to 93.678 million acres.
Plus the rally in crude oil has supported corn futures. “Crude oil at $100 a barrel supports a rising tide, supports all boats here. And we’re definitely seeing that. You know, you see a big reversal in the crude market and send it back down to 80 bucks or something, which I don’t know if that happens,” he says.
Wheat Adds Weather Premium
The wheat market was back with double digit gains adding weather premium according to Huck due to drought in the West and the extreme temperature swings.
“Out here in Dodge City, Kansas, you know, over the weekend, I woke up Monday morning, I think it was 10 degrees out here. So not what you want to see the middle of March when that growing point starting to come above the surface out here. A lot of vegetation protecting that growing point, I think. But if you drive around these fields out here and you can see some of the damage to the vegetation from that freeze event, then you turn around and we’ve got 90 degree days here coming into the week,” he explains.
He says wheat has also added war premium due to food insecurity concerns and as hard red winter wheat approaches $7 on the July contract he thinks producers should be making some sales.
Cattle Futures See Profit Taking
After a nice rally in cattle futures the first two days of the week the cattle market has hit some chart resistance and is seeing some profit taking, especially heading into the Cattle on Feed Report on Friday.
Buck says, “We’ve had three straight days of recovery, an inside trading day so far. We’ve got a cattle on feed report coming up at the end of the week as well. It’s seen as steady with a year ago. “You also hit some key moving averages there. You got to pay attention. Can we cross over that?”
Higher Cash Ideas
However, he says there are some ideas of higher fed cash this week.
“And, you know, box beef above $400 has incentivized the packer to maybe be a little more aggressive with their bids and maybe move them chains a little faster,” he explains. “It’s just how much leverage does the feed yard have? How backed up are they? And how aggressively do they want to move animals, I guess?”
Cattle Recover With Equities
The other thing helping stabilize the cattle market has been the recovery in the stock market this week and the slight easing of crude oil prices. However, the market is also watching the FOMC meeting. Buck says it’s largely expected that the rate’s will be unchanged.
“But what are Powell’s comments going to be regarding the war, energy prices, the long-term impact to the economy? That could very much impact what this cattle market wants to do the rest of the week. And the trade’s going to be watching and listening to what Powell says and looking at that dot plot out there. What are the projections going forward for future rate cuts?”
Because with higher inflation, higher gas prices, you could erode consumer demand.
