Grains all higher early, but then turn mixed.
Many of the grain futures contracts ran up into chart resistance again and saw farmers selling at those levels which capped the rally.
That has been a reoccurring pattern in the grain markets lately and it is also part of the volatility associated with a weather market says Nick Tsiolis, with Farmer’s Keeper.
He says weather concerns globally started the initial move higher Thursday morning in the grains and has been an underlying supportive feature of the markets recently causing funds to exit short positions.
There are still weather problems lingering in Russian and Black Sea wheat areas, soybeans and second crop corn in Brazil are seeing problems ranging from hot and dry conditions to continued heavy rains and flooding in Central Brazil.
Now weather is becoming a concern in the U.S. with heavy rains this week in the Northwestern Corn Belt and rain in the forecast for portions of the Eastern Corn Belt which could cause planting delays and prevent plant. Tsiolis says that puts the 90-million-acre corn estimate from USDA in question.
Soybeans have also been supported with renewed talk of China buying from 2 to 8 cargoes of soybeans from the U.S. Farmers are also starting to talk about planting delays in soybeans but will there also be a few more acres of soybeans planted if rains delay corn seedings?
Tsiolis says the story for soybeans is near term bullish, but long term bearish so farmers need to be taking advantage of pricing opportunities.
Cash basis levels have been holding firm in many areas, especially around ethanol plants but Tsioilis says there isn’t any end user panic buying yet, which is a big signal he watches for selling cash grain.
The grain markets are volatile and it’s challenging to price grain in a weather market, but he says producers need to be rewarding this rally and selling incrementally.
Livestock producers are an end user that he says needs to watch local basis levels for pricing feed needs. However, he says with current cattle and hog prices producers have a little more cushion.
