Grain and livestock futures end mixed on Thursday.
Soybeans made new lows for the move with South American hedge pressure weighing on the market.
Arlan Suderman, Chief Commodities Economist with StoneX. “There is a lack of demand for U.S. soybeans because of the exports coming out of South America, Brazil specifically.”
Brazilian farmer selling has also picked up as the Real has devalued in relation to the U.S. dollar. Suderman says, “The Brazilian farmer continues to be undersold and is now taking advantage of rallies to move grain. They’ve got to get it moved, they’re pushing it forward and that’s putting pressure on the market.”
Brazil is expected to ship over a half billion bushels of soybeans this month alone and he says that is hurting U.S. business. “We did see some business going to China is this morning’s export report but it was mostly business switched from unknown destinations.”
Technically soybeans scored new lows for the move which could open the door to the contract lows. “Yeah, I’m watching those late February lows, those are going to be key. If we hit those lows and bounce off of them double bottoms usually hold, but if we bounce off them and go back and hit them again triple bottoms often times fail.”
Weather is also generally seen as favorable as dry areas of the Corn Belt have received needed rains.
He says the weakness in soybeans spilled over into the corn market but demand for corn is lacking as well. “We had been ahead of USDA’s export projection on corn but now we’re starting to slip back on the sale side.”
Suderman is keeping an eye on Argentina’s corn crop. “We are getting a little bit more interest in what’s happening in Argentina right now with their corn crop where the leafhopper seems to be spreading a disease. Some of the reports are we could see some significant losses but at this point we don’t see enough damage or enough evidence of damage yet to justify rationing demand with higher U.S. prices.”
Despite a lower day in row crops, wheat futures were able to hold gains with concerns about deteriorating crop conditions with recent heat dryness in Kansas, Oklahoma, Eastern Colorado and parts of Texas. “Those areas just continue to miss out on rain,” he says.
The move in wheat was impressive considering the China export cancellations of Soft Red Winter wheat on this morning’s export sales report.
Funds have been content to stay short in all the grain markets. “We have our own StoneX Commodity Index and we track the relationship with inflation expectations and usually there is a direct correlation and buying in grains when inflation goes up. But in recent week’s we’ve seen grains break away from that because they don’t have a story and if fact the story is a bearish one,” he says.
Cattle end mostly higher but positioning ahead of cash news and the Cattle on Feed Report. However, Suderman while the market has stabilized after the HPAI scare he is concerned that demand has been slowing for beef and shifting down the protein chain to pork and poultry.
Outside markets continue to watch geopolitical headlines but while gold, crude oil and other markets have been trading those concerns the grain and livestock markets have not put in any premium.
