Grain and livestock markets ended mixed Wednesday.
Mike Minor with Professional Ag Marketing says soybeans saw a nice short covering bounce on the heels of a rally in soybean oil, plus more flash export sales of 4.85 million bushels to China and the same amount to unknown.
“We got around some support areas on these November contracts but we’ve also seen palm oil rally to new highs and that has been dragging the soybean oil market up as well,” he says.
Minor is somewhat bearish about soybeans moving forward due to the record crop projections in South America and the fact that planting pace is getting back to normal in Brazil with recent rains and more in the forecast.
Yet, he points to several other factors that are headwinds for the market including trade under a Trump Administration, the 550 million bushel carryout and the soy complex is struggling to find demand.
“After CIF levels rose about $1.50 the U.S. priced itself out of the Chinese market and most of the soybean business is going to Brazil,” he says.
However, corn could not follow soybeans or the higher wheat market, despite more export business.
Private exporters reported 10.7 million bushel sale of corn to unknown destinations making the 10th day out of the last 11 that flash sales have been announced.
“I think most of this is front loading due to trade concerns and the geopolitical climate,
he adds.
Minor says corn saw hedge and harvest pressure, plus technical selling after failing to take out chart resistance.
Live and feeder cattle futures saw follow through technical selling after bearish reversals on Tuesday and with lower boxed beef values.
Minor says the key will be what the cash does as the end of the week.
Seven weeks of higher cash trade have held up the cattle futures so far.
Lean hog futures hit more contract highs on fund buying but Minor says strong demand as seen in the higher cutout value has also been supportive.
“You’ve got a fantastic fundamental picture and cutout values over $100 which is incredibly rare at this time of the year,” he says.
Minor says the December contract in the mid-80s is also rare and only in the 2014 did that contract expire above this level.
