Grains are mixed early Tuesday, with cattle and hogs higher.
Mark Knight, Farmer’s Keeper Financial, says soybeans are rebounding after Monday’s lower session which saw a test of recent support near the 50-day moving average.
Tuesday morning futures have rebounded to test resistance at the 200-day moving average which is at $10.51 ¼ today.
However, he says the market needs to close above technical resistance to keep the momentum going.
“Soybeans have hit the 200 day moving average several times and need more bullish news to take out those levels. Maybe if we start seeing some of these trade deals announced that will be the catalyst,” he says.
Funds or managed money have been buying both soybeans and corn recently and added 71,000 contracts to their long position in corn and also bought nearly 77,000 contracts in the soybean market.
He thinks it is tied to money flow and optimism regarding trade deals.
However, those deals will need to start being finalized or the funds may lose interest in the grain markets.
We heard news that obviously the U .S. wanted to get some trade agreements done quickly. Japan was the real hopeful one. They pulled back, there’s just a lot of nuances with every one of these trade deals with every country. There’s so many commodities and products to discuss and obviously each country’s trying to protect their little niche area,” he says.
Even though India and the U.S. talk like they have reached a deal, he says that is a complicated relationship and may not in the end yield big gains in market access for the U.S.
“Our relations with India over the years have been, call it strange, I guess. Sometimes it’s friendly for the most part, but that’s a giant population and that would go a long way to kind of maybe making some of the, you know, a potential deal with China less important,” Knight explains.
Corn and wheat are lower in tandem with planting pace on corn coming in ahead of expectations at 12% nationally.
“You know, we were expecting 10% and those were built up numbers already because of
the weather that was coming.”.
That included states like Iowa which showed corn planting at 18% done.
Weather is also weighing on the wheat market, despite a 2% drop in crop ratings to 45% good to excellent.
He says some beneficial rain is in the forecast for the dry hard red winter wheat areas and even in the Northern Plains.
Soft red winter wheat areas are still too wet and it showed up with Illinois wheat conditions falling 11%, and unfortunately there’s more rain on the way.
Cattle futures are rebounding with the recovery in the S&P 500 but Knight says that market has been resilient and with strong cash the futures should continue to hold together and could even take out the old contract highs.
