Grains quietly mixed Tuesday morning, with cattle lower and hogs higher.
Grains Quiet in Holiday Mode
Grains are quiet but fractionally higher on Tuesday. Volume is light as we are into holiday trading already says DuWayne Bosse of Bolt Marketing. Many traders have already closed out positions and taken off for Christmas. However, under light volume the market can sometimes see some surprise moves.
Corn Above 200-Day Moving Average
Corn is one market that could see a surprise rally this time of year especially with the March contract above the 200-day moving average. Bosse says the market is also well supported by the record pace of exports and the possibility of a yield cut in the January WASDE. He for one thinks USDA will be lowering corn yield with the dry finish. Rallies have been met by farmer selling up around $4.50 in the corn market but that selling may have slowed here at the end of the year.
Corn Market Looking for a Story
Even with record exports Bosse points out that the market is still chewing through a 2 billion bu. ending stocks figure and even a 182 bu. per acre yield may not get carryout much under that figure if USDA raises feed and residual to offset it. Currently the market is looking for a story from South America weather issues or even China buying corn.
Have Soybeans Bottomed?
Soybean futures look like they are trying to bottom after $1.20 retracement from the highs on Nov. 18 according to Bosse. However, he’s not sure even if the market has stabilized if it can sustain much of a recovery. While China export sales have picked up the market has realized that China is only buying half of the volume they did last year from the U.S.
Soybean Exports Lagging
The lagging weekly export total showed a nearly 89 million bu. export sales total for the week ending Dec. 11, which if it had been current may have given the market a spark. However, the year to date sales are at 947 million bu. which is still 33% behind a year ago. So that seems to be a drag on the market.
South American Crop Holding Back Soybeans
Plus, the South American soybean crop is planted and has been getting pretty timely and adequate rains, which is also weighing on the market. Private estimates have been rising for Brazil this week with AgRural at 180.4 MMT, up nearly 2 MMT from their previous outlook. Dr. Michael Cordonnier also raised production 1 MMT to 177 MMT.
Wheat Pops On Rising Black Sea Tensions
Wheat saw short covering by the funds who were adding risk or geopolitical premium amid rising Black Sea tensions. However, he thinks there could be an emerging weather story with above normal temperatures in winter wheat areas causing some of the crop to break dormancy. If that crop sees any return to cold temperatures it could be open to winterkill.
Cattle See Profit Taking
Live and feeder cattle futures were two-sided early but some profit taking set in mid-session after a higher day on Monday pushed by a bullish Cattle on Feed Report. However, futures have run up into chart resistance and Bosse says the 62% retracement levels will be the next hurdle to cross.
Cash Trade the Key
Bosse also thinks the market was a bit disappointed with last week’s weaker cash trade. Although negotiated volume was only around 35.000 head the five area weighted average steer price came in at $227.97, down 22 cents from the previous week. Plus, there were live sale prices at $228 in the North and South which compared to $230 the previous week.
Lean Hogs Higher Ahead of Reports
Lean hog futures had a bit of a chart breakout on Monday and are trading higher early Tuesday. Bosse says the market is gearing up for a friendly USDA Quarterly Hogs and Pigs Report which is expected to show lower inventory by 1% in addition to a 1% lower breeding herd.
