Soybeans, bean oil and cattle collapse on Thursday, with gains in corn, wheat and hogs.
July and Nov. soybeans were down around $.26 with a limit down close in soybean oil in every contract month.
Jeff Hoogendoorn, Professional Ag Marketing, says the sell off in bean oil was tied to unconfirmed rumors the Environmental Protection Agency’s draft proposal on the Renewable Volume Obligations (RVO) sent to the Office of Management and Budget (OMB) contained lower than expected volumes for bio-mass based diesel.
Biofuels industry officials disputed the rumor that the volumes in the proposal were set at at 4.65 billion gallons, which was below the 5.25 billion gallons they had recommended to EPA in March.
In fact, biofuels groups worked with the American Petroleum Institute to come to an agreement on the higher blending rates and were assured by EPA those would be the levels.
Hoogendoorn says the bean oil market had just hit new highs though, so the market was due for a correction and also coincided with a $2 drop in crude oil.
NOPA also pegged soybean crush above estimates at 190 million bu. but bean oil stocks in the report were at 1.53 billion pounds, well above estimates of 1.412 billion which may have added to the selloff.
Hoogendoorn says despite the ugly close July and November soybeans are still above the 200-day moving average and other support areas he watches, so the uptrend is still intact.
Corn futures had a quiet day and held up well considering the slide in soybeans.
July was up $.03 and Dec. down nearly $.02 seemingly unaffected by the selloff in the soy complex and likely getting a lift from higher wheat.
However, favorable weather and rain in dry areas of the Western Corn Belt may have capped the December contract in corn.
Live and feeder cattle futures were also sharply lower for a second day after scoring key reversals on Wednesday.
That is where the market makes new contract highs but ends sharply lower, taking out the previous day’s lows.
Hoogendoorn says he’s not ready to call a market top in the cattle, because the fundamentals are still too bullish.
Cash trade developed in the North $2 higher than last week at $358 dressed and $229 live. The South saw some $220 live sale prices in Kansas, up $1 from last week’s weighted averages. Texas was the only place seeing some weakness with light $218 trade, $1 lower.
He also points out that the cattle markets have had several key reversals that have been negated by strong fundamentals, including cash.
Lean hog futures had an impressive rally despite the down day in cattle, with the possibility traders unwound or took profits on long cattle/short hog spreads.
June lean hogs closed above $100 despite the premium that futures contract holds to the Lean Hog Index.
With the futures rally June is now $10 over the index, which is unusual according to Hoogendoorn.
He says it tells him there is anticipation of cutout values improving as slaughter starts to see a slow down around the holidays.
Pork cutouts were up over $2 at noon at just over $99.
