Grains are struggling to hold with action on both sides of steady Wednesday morning, livestock are lower.
China Buys More Argentina Soybeans
Kent Beadle with Paradigm Futures says the soybean market saw a bit of recovery on Tuesday and was trying to hold on Wednesday morning with news that China has purchased more Argentina soybeans.
China reportedly bought 10 cargoes on Tuesday and then expanded those purchases to 20 cargoes overnight putting total purchases at 1.3 MMT.
It was in response to a drop in Argentina’s soybean prices as they suspended their export taxes on all grains until Oct. 31.
Will China Buy More Argentina Soybeans?
So how many more cargoes could China buy from Argentina?
Beadle says the third largest soybean exporter does not normally export whole beans but instead soybean meal and bean oil.
So, he thinks it may be difficult for them to sell many more cargoes without putting their own crushers in jeopardy of having to import soybeans themselves, maybe even from the U.S.
Why Are Soybeans Holding $10 With All of the Negative Export News?
While price action has been negative this week the soybean market has continued to hold above $10, which is psychological support.
Beadle says the reason may be with just a one or two bushel yield loss the balance sheet gets very tight for soybeans, as he thinks the U.S. will pick up business from other countries with China out of the market.
Corn Weakens With Higher Dollar: Still Resilient
The corn market is seeing some weakness early Wednesday with the strength in the dollar.
However, Tuesday it continued to defend its uptrend on the charts.
The corn market is getting some help from strong demand.
Flash sales have been reported the last three days with Mexico in for another 12.3 million bu. purchase again on Wednesday morning.
Beadle says that demand combined with lower corn yields will continue to help the corn market hold in this price range and he thinks eventually move above the $4.30 resistance area on the charts.
Wheat Bottoming?
Wheat is mixed after a strong close on Tuesday, facing the headwind of the stronger dollar.
However, the reversals off new contract lows this week in all three classes are technically showing the market is trying to bottom according to Beadle.
“This is bullish divergence,” he says.
However, a bottom has been called several times in the wheat market only to fail.
However, Beadle says U.S. wheat is cheap and it is stimulating demand at these levels that will eventually lead to price appreciation.
Cattle Consolidate
Live and feeder cattle futures are seeing some profit taking on Wednesday as they have prices in the bullish news on New World Screwworm (NWS) and the Cattle on Feed Report.
Now, the market will need to see higher cash to move higher and possibly retest contract highs according to Beadle.
Lean Hogs See Profit Taking
Lean hog futures are also seeing some profit taking after new contract highs in many months on Tuesday.
However, these are profitable levels for producers and so he thinks there may also be some hedge pressure.
