Grain markets ended mostly lower on Tuesday, cattle closed mixed and hogs higher.
DuWayne Bosse with Bolt Marketing says corn and soybeans saw profit taking after stretching to new highs for the move as the markets were overbought.
Both corn and soybeans also ran into technical resistance with March corn getting stopped out just under $4.80 and March soybeans at Tuesday’s high of $10.64, with the the 200-day moving average right above that.
This rally also met some farmer selling after reaching seven month highs on corn and some levels farmers had pre-placed sell orders established at.
Bosse says this doesn’t mean the rally is over....at least for corn.
He says corn still has the better fundamentals with the 1.54 billion bu. ending stocks number and continued strong demand.
The funds are also long the corn market an estimated 300,000 contracts as may defend that position.
Bosse is more bearish for soybeans with the large South American crop on the way and CONAB confirmed that raising their Brazilian soybean estimate to 166.32 MMT, which is up 18.6 MMT from last year.
He says even with some production losses in Argentina due to dry weather it looks like Brazil may make up for that.
The funds have covered most of their short position in soybeans but Bosse says they don’t like to be flat and he fears if the crop confirms in South America they will push back short in a hurry.
USDA did announce another sale of 7.3 million bu. of soybeans to China on Tuesday morning.
Wheat futures ended mostly lower with some spillover from lower corn and soybeans.
However, wheat was also unable to hold on to early gains spurred initially by a big pullback in the U.S. dollar index off two year highs.
Live cattle futures were down for a second day as the market sees profit taking off recent new highs for the move and maybe even some hedge selling.
However, Bosse thinks this is a healthy correction in a bigger bull market.
Feeder cattle futures rebounded higher but Bosse is concerned that funds are record long in this market and could exit as soon as the Mexican border is reopened to feeders.
Lean hog futures ended higher with the deferred contracts outpacing the nearby contracts and making new highs for the move.
Bosse says its hard to establish what is driving the move but underlying demand could be a big factor as exports are running ahead of last year.
Although he says hog numbers are also tightening due to disease.
