Soybeans and hogs rally Thursday, with corn, wheat and cattle lower.
Corn Hits Chart Resistance Watching Weather
Naomi Blohm with Total Farm Marketing says corn took a break after a three-day rally running into chart resistance in the December contract around $4.30.
The market may have added enough weather premium for the now and is waiting for confirmation of the heat ridge next week before making further advances.
“We saw short covering for three days but haven’t seen any new buying emerge it’s more like traders are content to say let’s just wait a couple weeks let’s figure out what’s out in these fields is it this 181 yield or is it the 185, 186 like some of the industry are saying it’s going to be.”
She says the yield will make a huge difference on new crop corn ending stocks and price action.
“To get back to $4.50 it will take a 181 bu. yield or lower. If we have the yield closer to 185 or 186 That’s more like two billion bu. carryout and that would be a reason why we see corn futures go below $4.”
The market was also held down by lower wheat values and disappointing exports with weekly old crop sales a market year low of 3.8 million bu. and new crop at 22.3 million bu.
Unconfirmed social media posts by President Trump suggesting Coca-cola would be changing its Coke formulation from high fructose corn syrup to cane sugar also cast a negative tone on the market as nearly 400 million bu. of corn are processed into corn syrup annually she says.
Soybeans Higher a Second Day But Rangebound
Blohm says soybeans were higher for a second day along with a sharp rally in soybean oil but still seeing a technical correction after testing the $10 support area on the November contract.
Buying was also tied to renewed hopes for China business as talk is still circulating they’re inquiring about U.S. bids.
She says soybeans are still trading in a range with $10 support and $10.30 serving as resistance and it will take a hot, dry forecast for August to break through that level.
“We know domestic demand has been just outstanding, but it’s the question mark of exports going forward that is leaving traders a little bit perplexed. So until we know for sure what the August weather is going to be, but until we have a better idea of what China and trade demand is going to be, I would expect that November beans trade within a range,” she explains.
Exports were lackluster on Thursday at 10.0 million bu. old crop and 19.5 million bu. new and China is still not on the books for any new crop business.
Wheat Still Hasn’t Bottomed
Wheat futures continue to see pressure even though the winter wheat harvest is well over 60% complete and should have started the process of bottoming by now.
Despite that December hard red winter wheat made another new contract low as Blohm says the perception is there is plenty of wheat in the pipeline.
Cattle See Profit Taking
Live and feeder cattle futures saw some profit taking after new contract highs in live cattle and some of the deferred feeder cattle futures on Wednesday.
Choice boxed beef was down again at noon by $.48 after losing $4.87 on Wednesday and she says that may have also played a role.
However, light cash trade has developed at steady to higher prices with the South at mostly $230, a few at $231, steady to $1 higher than last week’s weighted averages.
In the North, a light trade has been reported by a Regional in Nebraska at $380, $1 higher than last week’s weighted average (the majority are set for delivery the week of August 4th) but there is also some $240 live trade.
The large discount the futures are holding to the cash has been supportive but Blohm says the cattle markets have not been able to take out the 5-day moving average which has kept the funds defending their long positions.
She thinks the market could stay sideways waiting for next Friday’s USDA Cattle on Feed and Cattle Inventory Reports.
