Grains ended mixed on Thursday with livestock mostly lower.
Soybeans Fail on China Fears
Soybeans made new highs for the move Thursday but failed on concerns about the meeting between President Trump and President Xi in late March, early April being canceled.Matt Bennett with AgMarket.Net says, “There’s a report from China that says the talks by trade officials prior to the summit in China is not going well.
“And I think that that shook the market up because everyone’s expecting some sort of formal agreement. Everyone was worried about the tariff deal last week with the Supreme Court. President Trump tried to reassure everyone, I’ve got a plan. We’re still going to be able to put this into place. But let’s be real about it. If there’s not a plan and tariffs are not something that he can offer, I’ll tell you what, Brazil’s beans are a dollar cheaper. We all know that, and it’s going to be tough to expect that they’re going to buy a whole lot of beans in that case.
SCOTUS Ruling on Tariffs Takes Away Leverage
Bennett says with the tariffs being struck down by the Supreme Court that has taken away some of the leverage the U.S. had, especially regarding this extra 8 MMT of old crop soybean purchases.“There’s no guarantees there this whole thing so far has been a handshake agreement yes they bought beans it’s been great to see but the additional eight million metric tons that’s a lot to ask for again whenever we’re a dollar higher yeah absolutely so if we would get an agreement.
Could the U.S. and China Put a Deal on Paper?
Bennett says if the U.S. gets a deal with purchase commitments soybeans could rally. “If we’ve got the 8 million and President Trump and Xi decide to do the 25 MMT for the next three years and we get it in paper you have a razor -thin U .S. balance sheet. It’s not going to change one thing about the world balance sheet. Nothing. You’ve got a massive Brazil crop.” So he’s cautious about getting too bulled up.
Soybean Oil Hits New Contract Highs on RVO Proposal
Soybean oil hit new contract highs again in response to EPA finally moving the RVOs to the Office of Management and Budget.“That’s definitely what’s been pushing. And it looks like there’s going to be a big, strong demand, of course, for oils here in the U .S. to be used in making a renewable diesel. If that’s the case, I like the long -term aspects of that. You look at crush the last several months, every single month. We’re crushing more beans. Crush margins right now in Central Illinois. I mean, we’re running a $1.30 bushel. I mean, that’s incredible margin,” he explains.
Corn Closes Higher
Corn was up slightly on the day and also made new highs for the move and is trading back in the range set before USDA bearish January WASDE Report.Can it stay there?Bennett says, “It’s a tough call. Whenever I look at corn, old crop, we’ve got so much corn to chew through, okay? I don’t want to be negative here. I’m just trying to be realistic, okay.”
Cash Corn Could Drag
Even if corn futures can rally Bennett says the cash market may stay weak.“Dec corn, in my opinion, is going to stay relatively supported until we secure some acres. But as far as cash corn is concerned, cash corn is going to struggle. I think basis is going to work against you on any sort of rally move higher. Let’s say we get a big time rally this summer due to weather. Will we see bull spreading? Most likely, that’s how the market usually reacts on a demand or any sort of a rally like that. I just don’t think that cash corn rallies enough to keep pace with December futures. Why? Because I think you’re going to lose basis.”
No First Notice Day Selling?
Corn futures did not see the major selling pressure heading into first notice day like the last two year.“That’s a wonderful question. Going into first notice day, you would think that a lot of these folks were going to be pucking and corn. Most likely, you’ve seen some rolling go on. We have seen commercial stepping and buy a fair amount of corn here these last two weeks. And I think it was some of those folks that said, hey, I don’t want to roll. But I think those that were waiting to the last minute probably ended up rolling. To be honest, it’s surprising that we haven’t seen that, especially at the end of the month.”
Wheat Removing Weather Premium
Wheat futures continue to consolidate and Bennett says the market is taking out weather premium with recent rains in the U.S. “But you got March finally, it went above that $550 level. We’ve been struggling with that forever. And then you come in and we saw some buying on the other side of that. What’s happened this week? In my opinion, the forecast looks much more favorable for rainfall and wheat country. I’ve got to think that that’s playing somewhat of a role because I think there was some fear that that crop could really struggle. You know, bottom line is it looks like they’re going to get the rain they need.”
Cattle Market Sets Back
The cattle futures were down on end of month profit taking and certain about a possible strike at the JBS plant in Greeley.“ I think that you could have issues, especially if you come in here tomorrow and it’s actually a work stoppage. I could see a limit of lower moving cattle potentially. I’m not saying it’s going to happen, but there would be a little bit of fear.”
