After a five-day run of higher closes soybeans finally took a breather closing over 17 cents lower in the March contract. Both soybeans and soybean meal saw profit taking after hitting chart resistance, weekly exports were lackluster at 20.6 million bushels, but the biggest factor may have been the collapse of Brazil basis levels on soybeans. Vince Boddicker with Farmers Trading Company says Brazil soybeans are running well below U.S. prices. “People are saying with the basis dropping that hard maybe the Brazilian crop isn’t that tight. You put on top of that their price being over $2 cheaper than we are at current times.” He says a change in the weather forecast in South America may have also weighed on futures with the hot dry conditions in Argentina now only lasting for the next 7 days.
March corn was down a half cent closing at $4.51 ¾, also getting close to chart resistance with the 20-day moving average around $4.56. That market was also caught says Boddicker in the tug of war between lower soybeans and higher wheat. Exports were down from last week at only 37.6 million bushels.
Wheat futures clawed back after some early losses to close higher in all three exchanges, despite the stronger dollar. Boddicker says there was some classic spread unwinding between the three classes with March Kansas City wheat up 11 ¼ cents, while March Chicago wheat was only 1 ½ cents higher and March Minneapolis wheat ended up 4 ½. Talk of China looking for U.S. wheat was also supportive, while weekly exports were at 16.6 million bushels.
Live cattle rallied with the April contract closing at $180.70, which was up $2.35. March feeders surged $4.40 to $238.17. Funds were in buying pushing contracts to new highs for the move, but strong exports at 22,400 metric tons and higher cash helped push the market as well. Southern cash trade was at $174 to mostly $175, up $1 to $2, while the North traded $277-$277.50 dressed, up nearly $3 and live sale prices ranged from $175-$177.
Live and feeder cattle both stopped just shy of the 50% retracement levels so Boddicker says if prices get above there the funds could come back in and reestablish their long position. “I think it’s a possibility here. Last week it started feeling better, like there was more confidence coming into the market. Some of our work tells us the market should see a 70% retracement, which is a few more bucks in here and nice to see.” he says. Friday’s close will be important for determining if the rally can continue.
Hogs were also higher, also making new highs for the move and the April contract broke above November’s highs. Fund buying, stronger cash and cutouts, and monthly cold storage levels combined to push the market. Hogs also got a push from China’s economic stimulus plan, as well as yesterday’s news of the Chinese government encouraging hog producers to reduce capacity.
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