Grains end mixed with soybeans seeing corrective buying following July soybean meal, which was up $11.00, while corn ends lower, wheat mixed.
While meal saw some demand news with a flash sale of 228,000 metric tons to the Philippines, Shawn Hackett, Hackett Financial Advisors, believes the rally in meal is tied to the recalibration of the meal oil spreads and values. He says recent headlines about soybean oil indicate it is being undercut by other feedstocks for renewable diesel and Sustainable Aviation fuel.
He adds, “I think a lot of buyers that were thinking we had years of surplus to come and didn’t need to get aggressive in getting supplies on the books have now realized they need to do that. We’re not going to see bean oil being the center point for renewable diesel going forward. At least it doesn’t look that way.”
He says that creates a better crush margin for soybeans and brings better demand back in the market for soybeans.
Corn and beans took out March lows and according to Hackett may have put in exhaustion lows. “It looks to me like the grain markets are washed out here,” he states. Both are oversold and could see some short covering into the end of the quarter and before the USDA reports.
Corn has been pulled down by wheat and the lack of concern by traders about the weather. “I think we’ve had the first wet start to the U.S. growing season really since 2019 and usually if you have a wet May and a wet June there’s just no weather premium that the market feels it needs to put on,” he says.
Wheat has seen harvest pressure and Hackett thinks the only thing that could turn it around is for Russia or Ukraine to put export restrictions on due to the smaller drought and frost-stricken crop.
Hackett believes the pull back in all the grains sets up the market for a bullish surprise or reaction to the USDA reports and he says historically either the acreage or Quarterly Stocks numbers have been big market movers. “I think we could see less corn acres due to the weather problems this spring and potentially more soybean acres,” he says.
Cattle futures saw bull spreading with record cash driving buying in the nearby contract verses selling in the back months on the bearish Cattle on Feed Report placements.
Lean hog futures again hit new contract lows following softer cash as Hackett says there is too much supply on the market right now.
