Soybeans and products end higher on talk of China export sales and Mark Schultz, Northstar Commodity, says rising soybean prices in China and Brazil also lent some spillover strength.
Soybeans had a strong technical day and are trading in the top end of their recent range on the charts. “I am watching the July soybeans, and we need to take out and close above the $12.58 area,” he says.
Corn followed soybeans and Schultz says underlying support in that market is coming from the continued hot dry weather in major second crop corn areas in Brazil which could cut production.
Yet, corn is still trading in its sideways trading range. “We need to close back above $4.65 in the July contract to turn the market trend higher,” he says.
CH and KC wheat made new highs for the move and then saw some farmer selling hit to pull futures lower on the day. “We are harvesting in Texas and so there is some hedge pressure and farmer selling at these levels,” he says.
However, the global weather concerns are not over. “The weather models in Russia have been flip flopping but they have been dry for a while and if they don’t get rain soon that crop will see yield loss.” The crop has already suffered frost damage and private estimates have trimmed production. “I think we need to see the crop drop to 80 million metric tons in Russia for the market to really take off,” he says.
The other key will be if the smaller global wheat crop translates into export business for the U.S.
Both live and feeder cattle futures made new highs for the move with fund buying, plus early cash has been higher at $192 in the North on light volume, some $298-$300 dressed while in the South USDA is reporting $187 live sale prices which are also higher than last week. Schultz says futures are at a discount to the cash and the funds do not have a large net long position in the market so they could add to their length.
Will the market go back and retest the September 2023 contract highs? Schultz says so far the move has been impressive but he’s not sure if the futures are ready to take out those chart levels.
Lean hogs made new near-term lows after taking out the 200-day moving average, with fund selling and slower demand. He says the futures premium to the softening cash index also limits rallies.
