Grains end quietly mixed as do cattle futures, but hogs rebound into new contract highs.
Brian Grete, editor of Pro Farmer, says the grains have been rangebound and sideways with not a lot of fresh news to move the markets. “We’re needing a catalyst in here to kind of cement lows in these markets to encourage the funds to actively cover short positions and we just haven’t seen that yet,” he says.
Could that come from the April WASDE?
Grete says that’s the next piece of market information that could change that as the market is anticipating a 70 million bushel cut in corn ending stocks number based on a smaller than expected carryover in the Quarterly Stocks Report.
“But that would still leave ending stocks well above 2.0 billion bushels and so I think it probably takes a little bit more than that,” he says. Yet, Grete says you could also make a case for increasing corn demand for ethanol, feed demand or exports.
Conab will also release their Brazilian production estimates prior to the WASDE. So, will that trump USDA’s figures? “I think that the market right now is confused between the difference between USDA and Conab,” he states.
There is a discrepancy between the two agencies. Grete says USDA is likely to stay above the Conab figures because they take a balance sheet approach. “They reconcile the previous year’s production to what the usage numbers tell them,” Plus, Grete says Conab is not keeping up on the expansion in the Northeastern portions of the country.
Grete also warns that after the WASDE there is a risk that the funds, who added to their total short position in the grain markets last week, systematically start to get out of their short positions but the market doesn’t see much of a price response.
Live cattle futures saw a slight bounce on Monday after a $15 drop in the June contract from the recent highs to Friday’s lows. So is the market trying to bottom after the liquidation tied to Bovine Influenza A? He says the cash and cutouts will need to respond to help forge a low and feeders must bottom as well. Unfortunately, they put in new lows for the move on Monday.
Hogs started lower but funds used the weakness to buy and pushed all contracts to new contract highs. Higher cutouts at noon were also supportive, so there is some seasonal demand that is also resulting in buying interest.
