Grains and hogs end higher on Friday with cattle sharply lower.
Grains See Technical Bounce, End User Buying
Grain markets ended higher on Friday with technical buying and short covering. However, Shawn Hackett with Hackett Financial Advisors says with prices plunging at the beginning of the week in response to the bearish USDA report, the lower price levels stimulated end user buying. “We’ve had very good end user buying for sure. I think a lot of I think the market is questioning some of the supplies that came out on this report, especially the corn numbers. I think a lot of pretty good data that we have suggests they might be too high on the corn numbers. And so I think because of some of the distrust over the legitimacy of the USDA numbers. The value buying was brought into the market.”
USDA reported additional flash sales for corn of 11.7 million bu to unknown destinations and 4.7 million bu. sold to Japan for the 2025-26 marketing year. That followed a string of daily export sales announcements this week for both corn and soybeans.
Are the Lows in the Corn Market?
Corn was down 21 cents for the week on the March contract but with the strong finish to the week Hackett is confident some long term lows may have been established and the August lows will hold. However, corn has effectively carved out a new lower trading range and he says upside is going to be limited without some type of catalyst.
“I really think Monday was anticlimactic. Normally when you have a large supply report like that, if the market truly embraces and believes it, you would typically get follow through selling over the next couple of days. We did not see that. And the fact that we did not see that means that the market pretty much, in my opinion, in our opinion, has priced all that large supply numbers in on the balance sheets. And I think now we’re going to start chipping away from better demand, from some weather issues, acreage battles that are going to be talking about. So maybe some quarterly, quarterly grain stocks, adjustments in the market I think is moving beyond that supply, moving ahead and start looking at what could go wrong here with those large numbers. What is the market not considering. Have they overpriced to the downside here?”
Are Soybeans Forging a Double Bottom Low?
March soybeans lost a nickel on the week and have also carved out a new trading range with March making a double bottom at the January low of $10.38. Unlike corn, he thinks there is still some downside risk for soybeans with the record crop being harvested in South America. “When Brazil’s crop comes to market there will be South American hedge pressure weighing on the market. “That will also coincide with China switching their soybean buying over to Brazil,” he adds.
Wheat Adds Weather Premium
Hackett says the wheat market was also adding some weather premium with concerns about frigid temperatures in U.S. winter wheat area but more importantly a forecasted cold snap for Ukraine and Russia. He says that sparked some short covering by the funds as well.
Cotton Higher for the Week: Can It Stage a Bigger Rally?
The cotton market was slightly higher for the week but has been slow to stage a bigger rally despite slightly bullish USDA report data and a marketing year high on exports this week. USDA lowered cotton production to 13.9 million bales and ending stocks were cut 300,000 bales to 4.2 million bales. Hackett thinks eventually the market will stage a bigger rally because historically low acreage cannot be sustained for two years in a row. However, he does admit one headwind will be crude oil prices under the $60 mark.
Cattle Collapse on Another NWS Rumor
Live and feeder cattle futures collapsed on Friday on another unconfirmed rumor of New World Screwworm (NWS) in New Mexico. NCBA officials confirmed there was no case in the U.S. However, Hackett says the AI generated trading systems unfortunately tanked the market on Friday. He says those markets were overbought, especially the feeder cattle futures, and had hit some technical chart resistance and so there was some profit taking as well or fund long liquidation that added pressure to the market.
The lower futures led to only steady cash in the fed markets which was also a disappointment. Southern deals were mostly $233 with the Northern dressed market at $365 and live sales prices from $230 to $233. Hackett says while boxed beef values have been moving higher he is disappointed that the Choice values are only around $360 which may be limiting the upside in the futures as well.
