Grains See Early Strength Digesting Reports, Weather, Tariffs

Grains see early strength with mostly higher livestock futures.

DuWayne Bosse of Bolt Marketing says the grain markets are still digesting the USDA report data.

The corn market absorbed the 95.3 million acreage figure which he says was encouraging and the quarterly stocks were 200 million bu. below a year ago which was friendly.

On the surface the larger corn acreage pushes ending stocks over 2.0 billion bu. but that assumes a trend line yield which Bosse says may be difficult with the current weather setup.

The quarterly stocks did indicate farmers had been aggressive sellers of their old crop corn and soybeans and more is in commercial hands this year which he says explains the weaker basis levels.

Soybeans faded the bullish acreage estimate on Monday, but are back trading higher with help from a big rally in soybean oil.

He says the outlook for ending stocks is bullish moving forward because even if trend line yields were achieved carryout could fall below this year’s 380 million bu. and may even shrink below 300 million.

Wheat is also extended Monday’s gains boosted by lower acreage for both winter wheat and spring wheat.

Bosse is hopeful the lower acreage will finally be enough to bottom the wheat markets, especially with funds still short in all three classes and prices just coming off contract lows last week in Chicago and Minneapolis.

The key moving forward in the grains will be the weather and the impact of tariffs.

Wednesday is Liberation Day but Bosse says its unclear how the tariffs will work or what kind of retaliation we will see from global trading partners.

“This is uncharted territory for the markets and so its too early to determine how they will react,” he explains.

Cattle futures are seeing mostly higher prices early in the session as boxed beef values were higher yesterday and futures are trading at a discount to last week’s cash trade.

The five area weighted average came in at $212.14, but was down only $.62 from the previous week and still strong by all accounts.

However, Bosse says live and feeder cattle futures have not negated the key reversals from a couple of weeks ago and need to do that technically before they can make new contract highs again.

Lean hog futures are slightly higher to start the new month but will also be watching the impact of tariffs and possible retaliation.