Grains ended lower on Monday with livestock futures mostly higher.
Grains Fail to Extend Gains on Profit Taking
Grain markets ended lower on Monday, failing to extend gains after last week’s short covering rally and higher weekly closes. Sam Hudson with Corn Belt Marketing says the grain markets all hit technical resistance on the charts and may have seen profit taking by fund traders or even some farmer selling on the board.
Nervousness About Canadian Tariff Threat?
Hudson doesn’t think there was any spillover selling from the outside markets. There was a risk off marketplace Monday as President Trump over the weekend threatened to place 100% tariffs on Canada in reaction to their trade deal struck with China. This impacted the metals markets which rallied to record highs in gold and silver. The dollar index was also sharply lower on concern about a government shutdown and the possibility of U.S. and Japanese authorities threatening to step in and halt a steep slide in the yen, implying a readiness to buy the Japanese currency and sell U.S. dollars.
Soybeans Also Fail
Soybean futures were also lower on profit taking after the inability to stay above the 200-day moving average resistance area on the charts. Export inspections were strong at 48.7 million bu. Monday morning but the accumulated total on shipments is still 37% below last year. Hudson says China has also been slow to ship their soybean purchases, even though they are estimated to have reached their 12 MMT purchase commitment. But the sales will at least allow USDA to keep those exports on the books moving forward.
China Done Buying U.S. Soybeans?
With that being said, Hudson thinks China is likely done buying soybeans from the U.S. and will now turn to Brazil for their cheaper supplies. He says they may not be back in the U.S. market until August or September.
Weather Premium Being Removed in Corn and Soybeans?
Corn and soybeans, even soybean meal, seemed to put in some weather premium last week with the hot and dry conditions in Argentina and Southern Brazil. However, Hudson doesn’t think this weather has cut yields yet and until the private firms start cutting their production forecasts this won’t get too much more attention by the trade. Weather also had the effect of slowing down ethanol production and soybean processing efforts as some plants found it was more profitable to slow operations and sell the natural gas. Additionally there has been a slow down in grain marketing and movement with the Winter Storm Fern hitting 28 states with snow, ice and record low temperatures.
Corn Continues to See Strong Export Demand
Corn export inspections on Monday were solid at 59.5 million bu. and total shipments are running 53% ahead of a year ago. This follows huge weekly exports last Friday at nearly 158 million bu. for the week ending Jan. 15. This was the second highest weekly total and the highest since 2021. However, Hudson says even this strong demand isn’t enough to take a dent out of the large carryout at over 2.2 billion bu.
Wheat Sets Back Despite Freezing Temps
Wheat futures caught a bid last week ending 10 to 13 cents higher in the three classes for the week but also seeing a chart breakout on the hard red winter wheat above the 100-day moving average. Hudson says some of that was short covering by the funds but the cold weather and winter kill concerns in the winter wheat crop also played a role. However, he says with the stocks to use ratio globally so high the market really can’t put in more weather premium without becoming non-competitive and likely also saw some profit taking.
Cattle Follow Cash Higher
Live and feeder cattle futures ended higher on Monday with help from Friday’s higher cash trade establishment and weather. The five area weighted average steer came in at $234.70, up $2.20 from the previous week. However, on Friday the fed market cash in the South started out at $232 but by the end of the day extended to $236.50. The volume was $233 to $235. In the North dressed prices were mostly $370, up $5 and live prices at mostly $235, up $3 from the previous week. Higher boxed beef values at noon also supported the rally.
Can Live Cattle Futures Take Out Resistance?
Live cattle futures are still trading sideways though according to Hudson, and will need further cash strength this week to get through overhead resistance areas and achieve a breakout and bigger rally.
Lean Hogs Mostly Higher
Lean hog futures ended higher except for the Feb. contract. However, back months continue to grind into new highs. Hudson says those summer months are offering some attractive hedging opportunities especially with the lower feed prices.
