Soybeans and bean oil bounced on Tuesday with corn lower and wheat ending mixed. Cattle were mostly lower as well as milk futures.
Soybeans and Bean Oil Bounce on Biofuels Hopes
Soybeans and soybean oil saw a higher day on Tuesday driven by hopes President Trump would make a biofuels policy announcement regarding 45Z or the RVO proposal while speaking in Iowa after the market close. Naomi Blohm with Total Farm Marketing says the market is looking for another demand story with exports running behind a year ago and China completing their 12 MMT soybean purchase agreement.
China Done Buying U.S. Soybeans?
Blohm says China may be done buying U.S. soybeans until at least August as that is their normal seasonal pattern. Currently they have switched over buying cheaper Brazil soybeans as the new harvest is coming to market. News reports quoted private China buyers that stated China had bought 25 cargoes of Brazil beans for March and April delivery. When China comes back to the U.S. for soybeans it is unclear if they will be working on the 25 MMT purchase commitments or not. Currently, Blohm is skeptical about China’s willingness to buy 25 MMT in the next year.
South American Crop Estimates Being Watched
Hot dry conditions in parts of Argentina have been watched by the markets and at least some private estimates are starting to recognize some yield loss as a result. Dr. Michael Cordonnier lowered his Argentina corn and soybean estimates by 2 MMT. Meanwhile, he and other private firms continue to inch up the Brazilian crop and he raised his production estimate 1 MMT to 179 MMT while AgRural’s latest forecast is at 181 MMT. So Blohm says there will need to be more sustained weather stress and production loss to really lower the crop size and get the markets attention.
Soybeans Still in a Trading Range
The technical picture for soybeans continues to show the market struggling to get through the 200-day moving average resistance area on the charts basis March and Blohm says she doesn’t see too much that can change that in the near term.
Corn Drifts Despite Strong Export Demand
Corn futures drifted on Tuesday unable to follow the strength in the soybean market. Blohm says it was also disappointing that a flash sale of 4.33 million bu. of corn sold to unknown destinations was unable to support the corn market. There was also a sale of 12 million bu. sale of sorghum to unknown destinations, one of the largest single buys in nearly a decade. Could this be China? She says it is very likely China is behind the sorghum purchase but she thinks they could even be buying corn.
Corn Sees Range Bound Trade
Corn has also been trading in a new lower price range since the January WASDE report. Blohm says the market is stuck between strong support at $4.10 and resistance in the $4.30 to $4.35 area. She says corn may be unable to break above that level without a problem with the second crop corn in Brazil but that is going to be a couple of months down the road. The bottom side of the trading range should be well supported by strong end user demand, especially exports.
Wheat Also Stuck
Wheat futures traded both sides of steady Tuesday but continue to consolidate under last week’s highs. The market saw some short covering with concerns about winter kill but that fear has eroded and so will the market prices according to Blohm. She says demand has been strong on the export front but not strong enough to chew through burdensome global supplies.
Cattle Consolidate Ahead of Report, Cash
Cattle futures consolidated under Monday’s highs which served as technical resistance on the charts. The market may trade sideways awaiting higher cash trade again this week and ahead of the USDA Semi-Annual Cattle Inventory Report. The bulls will be looking for confirmation of the tight supplies but also news of any herd rebuilding on the horizon.
Milk Futures Pause After Limit Up Move
Class 3 milk futures were slightly lower on Tuesday, consolidating after some limit up moves on Monday. Blohm says the market rallied with some better prices for cash butter and cheese. She says futures have also priced in USDA’s production increases that have weighed on the market the last few reports. However, the upside is limited from here in the market.
