Grains end lower on Tuesday with continued consolidation and risk off fund and technical selling that spilled over from the outside markets.
The dollar was higher early in the session with concerns about interest rates staying higher for longer. That fear was renewed by crude oil hitting contract highs on the escalation of the conflict between Israel and Iran. The stock indices were also lower on that same news and that spilled over into the grains says Vince Boddicker, Farmer Trading Company.
He says the market has also had time to dig into the numbers from the USDA reports and there are more questions than answers about where those lost principal acres went. So, it is triggering some consolidation after markets failed to see follow through buying on Monday, Plus, he says, “The market needs more bullish news to rally and there isn’t much to found right now.”
Plus, there has been a pickup in farmer selling. “Probably also some cash people that had to sell when they saw it wasn’t going to keep going. So, you’re going to get some elevator hedging along with it,” he says.
Weather in the U.S. and Brazil, with some recent rains in dry areas and more in the forecast, also seemed to be a bearish factor for the grain complex. “There has been talk the last few weeks that areas of the corn belt are really dry and we’re going to get planting early because its dry. So, you alleviated some of those concerns,” according to Boddicker.
Wheat fell in response to winter wheat ratings being well above a year ago at 56% good to excellent in the first report of the 2024 season. “They are probably the best ratings we’ve had in four years on that initial report and they’re getting more rains in those Southern Plains and Northern Plains wheat areas,” he adds.
Technically, Boddicker says it’s key the grain markets hold last week’s lows in the wheat. “And really those February lows are the key ones when you look at corn and soybeans,” he says.
Live and feeder cattle futures recovered after the Monday meltdown on a human case of HPAI but how much can the market recover? Boddicker says he thinks the market will continue to be choppy and sensitive to new HPAI news and the market needs to build back confidence that when the market breaks the buyers will be there.
However, a retracement to last week’s highs is not out of the question, but he was also cautious because weights continue to creep higher which is offsetting the record low inventory. “Corn is cheap and so producers have an incentive to feed to higher weights,” he says.
Lean hog futures ended mixed and off session highs after June made new contract highs earlier in the session. Boddicker says strong demand, especially on the export front should keep that market well supported.
