Ag markets closed higher except for wheat as cattle and hogs surged.
Allison Thompson with The Money Farm says corn and soybeans saw a slight bounce on South American weather and positioning heading into the big USDA reports.
Thompson says the market is expecting a .5 bu. cut in corn and .1 bu. cut in soybean yield.
However, corn has rallied nearly $1 and soybeans around 50 cents off the contract lows, so it will take bigger yield cuts than expected to push prices through recent chart resistance that both corn and soybean markets have failed at.
“Yield could be the surprise in the report, especially with estimates being very tight, it just leaves more room for a surprise element.”
She thinks that’s possible based on the dry finish for corn and soybeans last fall and reports she received from clients of disappointing yields for at least soybeans.
A drop in yield would also lower the final production number.
For corn, USDA could also raise demand more than expected which would be bullish according to Thompson.
“Ultimately we’ve been trading some really good demand in corn and that’s got us a dollar off the lowest pretty much. So, if we’re going to see a move higher tomorrow we need we need to see a surprise or really good numbers on both production and demand,” she explains.
However, it could also be confirmed in the quarterly stocks and that report has a long track record of surprises.
Thompson calls the reports a non-event for the wheat market as she isn’t expecting USDA to make large adjustments to either U.S. or global ending stocks and the same is true of the winter wheat seedings.
Wheat fell on Thursday under the pressure of a higher U.S. dollar which was back challenging recent highs.
Cattle futures surged higher making more new highs and negating Thursday’s technical reversal.
The trigger was more record cash with the North reporting $320 dressed trades, up $5 from last week’s records and light trade at $200 in the South.
Both cattle and lean hog futures gapped higher on the opening, which may have been tied as well to reports a potential strike in East and Gulf Coast ports had been averted.
These are key areas for U.S. pork and beef exports.
