Grains plunge on Monday with hogs, while cattle see a strong rally.
Naomi Blohm, Total Farm Marketing says a combination of factors pressured grain markets, including end of month positioning and profit taking, plus tariff concerns.
She says the grain markets, especially corn, was overdue for a correction and so this is a pause in the action, not a major change in trend.
“The fundamentals are still bullish for corn moving forward with tight ending stocks but we may trade sideways for a while. Funds are long in corn and may defend those positions until the end of March awaiting quarterly stocks and prospective plantings,” she says.
Trade fears are reemerging as the U.S. is imposing a fee on Chinese vessels coming into the U.S. ports, in addition to the 10% tariff on imports, and that is turning up the heat on the trade war.
Plus, Blohm says the 30 day extension on 25% tariffs on Mexico and Canada is closing in at the end of the week which may be making traders nervous.
Brazil is seeing second crop corn planting start to catch up which may be a short term negative for corn.
The soybean complex traded tariff fears but the market is also seeing South American hedge pressure and improve weather in Argentina.
USDA’s Ag Outlook Forum at the end of the week will also provide some early forecasts for acreage and expectations are for higher corn plantings and lower soybean acreage.
She adds the wheat market was lower she says removing weather premium with warmer temperatures forecast for both the U.S. and Black Sea winter wheat production areas.
Wheat trader may also be cautious in anticipation of a possible end to the Black Sea war soon.
Live and feeder cattle futures saw a strong close with another case of New World Screwworm reported South of the border and the prospects of a possible bottom in the cash and cutouts.
Blohm says the USDA Cattle on Feed Report again confirmed tight numbers of cattle and the cash market may be close to a bottom especially with boxed beef values finally rebounding at noon.
