Grains close mixed following the February WASDE, which was bearish soybeans and neutral to slightly bearish for corn and wheat.
USDA raised U.S. soybean ending stocks by 35 million bushels (mb) to 315 million, by lowering exports the same amount. Corn ending stocks were raised 10 mb to 2.172 billion bushels (bb) and wheat carryover was upped 10 mb to 658 mb.
USDA did acknowledge the impact of the historic drought on Brazil’s production but only lowered soybeans 1 million metric tons (mmt) to 156 mmt and revised last year’s crop up by 2 million to 162 mmt. That and the higher U.S. ending stocks were bearish. However, market analysts say those numbers were trumped by Conab’s estimate for Brazil beans, at 149.4 million metric tons, down nearly 6 million from last month.
Don Roose, market analyst with U.S. Commodities, says, “The Conab numbers were positive for the most part, and there’s a big disconnect between the USDA and what Conab is saying.”
Technically Roose says soybeans scored a hook reversal and so he’s optimistic the market is trying to signal a bottom. “Remember June 8 we tried to put in a low at $11.75 ¼ and we rallied almost $2.00 on weather concerns. When you went down yesterday to $11.79 it held, so we are basing but let’s see if we get back to the $12.05 area and can get some fund buying coming in.”
The rally in soybean oil, Roose says, also helped pull soybeans back higher as the market saw technical buying after holding a double bottom support area from May 31, 2023 with chatter of growing biodiesel demand.
Corn made more contract lows drug down by the wheat and the higher U.S. ending stocks. USDA cut Brazil corn production by 3 million metric tons to 124 million. But it’s still well above Conab’s estimate of 113.4 mmt. Roose says the corn market is trying to respect that. “There’s still a lot of uncertainty about the corn crop in South America as Argentina’s crop is midway through pollination and Brazil’s second crop corn just being planted. So we don’t have a lot of risk premium built in.”
Wheat futures saw continued technical selling and slow demand weigh on the markets. USDA did raise U.S. ending stocks 10 mb but lowered global carryover a half million metric tons. Roose says Russia and the Black Sea region continue to undercut the U.S. keeping a lid on prices. “The market has been going nowhere chopping in a tight range. We are at fair market value on the wheat we can’t go down big and we can’t go up big.”
Cattle markets hit more new highs on fund buying but also strong fundamentals. Roose says, “The weather has been the great equalizer and lowered weight, which has given the feedlots leverage and changed the narrative back bullish.”
Hogs saw more consolidation with sliding cutout values pressure the futures after being down for several days.
