Grain and livestock futures were mostly higher Tuesday with the exception of Minneapolis wheat, a feat rarely seen in the past several weeks.
Soybeans led the price gains, up for the 4th day, on corrective buying and help from a rally in soybean meal.
Dave Chatterton, with Strategic Farm Marketing, in Champaign, Illinois, says part of the rally came from the South American weather forecast which is turning warmer and drier for Argentina as well as some of the critical areas in Brazil. Plus, the market is still trying to determine crop size in Brazil, especially on soybeans with continued lower private estimates. “We’ve kind of beat the size of this Brazilian crop to death, but more and more analysts are coming in at that sub 150 mmt range for that Brazilian soybean crop as the early yields reports have been disappointing. In doing so we’ve seen a few analysts as low as 135 mmt or 138 mmt. That starts to change the export profile.”
Technically the March soybean contract took out last week’s highs and now projects to $12.60 to $12.70 area according to Chatterton. “That price looks like a long way away but the funds are now short in the soybean market. They have made a big swing, you’re talking about a position that was you know, was 80,000 or 85,000 contracts net long late in November. That swung to 80,000 or 85,000 contracts short here to start this week.” Funds are also short in soybean meal and soybean oil, which is unusual for this time of year.
March corn was also higher for a 4th day but ended just 3/4 cent higher and well off session highs. The contract hit some resistance on the charts around $4.49 which is the 10-day moving average and $4.50.
Chatterton says corn is in a consolidation pattern with the 2.16 billion bushel ending stocks figure serving as headwind for the market. “While long term support has held at $4.40 on March corn, the market quickly runs up into resistance around the $4.46 to $4.50 area.”
Wheat ended mostly higher except for Minneapolis wheat and saw inter class spread unwinding. Chatterton says wheat is looking for direction right now and is essentially a follower of corn and soybeans.
Cattle and hogs both had chart breakouts on Tuesday and made new highs for the move as funds were back in buying in both complexes, but livestock also got pushed by rising product values and steady to firm cash.
Chatterton says Choice boxed beef moving above $300 caught a few traders off guard and so the funds may also be re-entering some long positions in cattle.
The chart looks even better for the April hogs, “It broke out, not only to a new high, not only to the highest level that we’ve had since going back to early November, but also looking at a situation where there was a pennant formation there that we’ve now added on to. There’s a chart measurement there that that gives you some upside.” This chart pattern he says is starting to get the attention of the fund and technical traders.
