Grains close higher with spot month corn back above the $4 mark. Livestock end mixed.
Tomm Pfitzenmaier, Summit Commodity Brokerage, says it was a recovery rally in corn and he doesn’t see much change in the fundamentals that drove prices this low in the first place. “The big question now is will the rally hold or be sold?”
Farmers have been selling on any strength especially heading into first notice day on March contracts this week. Plus, the funds have now accumulated a record short position in corn of 340,000 contracts. Pfitzenmaier says they are trend followers and until that trend changes, he doesn’t see a lot of upside potential. “Could we go up to the next resistance level on the charts around $4.18 on March corn? Maybe, but then I think we may see more farmer and fund selling on that strength,” he says.
Soybeans also bounced off of new contract lows but just like corn he doesn’t see anything bullish for the market to rally on. “Sure, there’s talk of the Brazil soybean crop being cut about 10 million metric tons, but you have to ask yourself so what? Will it really make a difference, or will it just mean Brazil will run out of soybeans to export a little sooner?” He says unless the demand from China switches to the U.S. it’s hard to sustain a rally in the market and last week’s marketing year low exports at only 2.1 million bushels were evidence the U.S. is not attracting demand even at lower prices.
The wheat market extended last week’s gains so is it bottoming? Pfitzenmaier says it’s possible, but it may just be short covering, “because the fundamentals aren’t that great for wheat either,” he says. And even if the market is bottoming, he doesn’t think it can it lead corn and soybeans higher.
Live cattle staged a nice comeback despite higher-than-expected placements in the Cattle on Feed report. It initially opened lower but there was buying on the pullback with continued strong fundamentals and tight supplies. Funds have also extended their length in that market.
Hogs end mixed with some consolidation after new highs for the move Friday and a higher weekly close. The market may have run up into chart resistance but here again, funds have been adding to their long position in that market and the seasonals are starting to point higher he says.
