Soybeans and meal soar higher on Friday pulling up corn, while wheat retreats.
Naomi Blohm with Total Farm Marketing attributes the recent strength in the soybean complex to end of quarter fund short covering.
However, the market has also been adding weather premium on the dry Brazil forecast, plus hopes for more China demand especially with the economic stimulus announced this week.
Soybeans closed higher for a sixth straight week, with the November contract up 53 3/4 cents.
She says November is starting to run into major chart resistance around $10.85, which coincides with the 100-day moving average.
To take out that level and keep the rally going Blohm thinks the market needs three bullish factors to align and give the funds a reason to want to exit their short positions.
1. A friendly surprise in the USDA Quarterly Stocks Report - “I think the quarterly stocks would have to come in significantly less because if you look at ending stocks verses a year ago they are much bigger,” says Blohm.
2. The value of the dollar needs to go down further.
3. Additional hot and dry weather in Brazil.
Corn closed higher Friday and December corn was up 16 1/4 cents for the week.
Corn has been following soybeans, but driven by similar factors.
So, she says December corn needs the same catalyst to take out major chart resistance at $4.25.
Blohm says if the markets cannot get above these technical areas farmers need to use that as a cue to get some cash sales on the books.
However, she is watching an emerging production issue in Argentina as farmers there are expected to plant 17% less corn for 2025 due to problems with the leafhopper.
“If we get a weather problem on top of the lower planted acreage then we really have something to watch,” she explains.
Wheat was not able to follow the row crop rally as she says futures are approaching chart resistance at around $6.00 on the December Chicago wheat contract.
Plus, futures saw some end of quarter and report positioning ahead of the USDA Small Grain Summary.
“The market has rallied around 80 cents and is at a level that is makes us less competitive with Russia’s lower prices,” she says.
Live and feeder cattle futures scored new highs for the move with higher cash trade.
Yet, live cattle consolidated into the close and Blohm thinks the recovery rally in that market is running out of steam.
Lean hog futures ended mostly lower with heavier weights and increased upfront supplies indicated in the Hogs and Pigs Report.
