Grain and livestock markets closed mixed Wednesday.
Rich Nelson of Allendale says corn and soybeans showed resilience rallying into the close on technical buying and strong demand.
The markets saw more flash export sales for corn and soybeans and weekly exports on Thursday are likely to be strong, plus ethanol production was robust for a sixth week and is running ahead of USDA’s long term goal.
“We do think at least on the corn the market has reigned back some of its demand concern,” he says.
However, is the export activity front loading by export customers ahead of the elections and on tariff concerns?
“I think there is some question about future sales after the election. Not so much for corn and wheat, but soybeans. Keep in mind for the past two years soybean export sales were eventually revised down 125 million and 175 million bushels,” he says.
Plus, he says Brazil soybeans are now cheaper than the U.S. with a devaluation of the Real, there are problems with low water levels again on the Mississippi River, plus South America is getting needed rains.
Wheat tried to follow corn and soybeans but struggled with a higher dollar.
Nelson says the U.S. is currently not competitive with Russia and their export pace is running at par with last year, but should slow down in the future with their shorter crop.
He says its too early to put weather premium in the wheat market based on dryness in the Central and Southern Plains.
Live and feeder cattle futures put in reversals after making new for the move highs perhaps hitting chart resistance and watching the plunge in the stock market.
Nelson says the the market also reacted to the McDonald’s E.coli story.
The CDC said onions on the McDonald’s Quarter Pounders were the source of the E.coli not the beef, but mid-session the company stated they had not yet narrowed down the source.
“So perhaps a small demand hit but overall this market is still holding a quite strong uptrend,” he explains.
Lean hog futures also made new 1 year highs and its not just fund buying.
Nelson says six weeks of lower than expected slaughter numbers are supporting smaller supplies and boosting the market.
