Corn and soybeans see another lower day, with wheat barely holding gains. Cattle fall, while hogs soar.
Matt Bennett with AgMarket.Net says corn and soybeans saw heavy technical or fund selling pressure on Wednesday.
Corn Pulled Down by Soybeans and Fund Selling
Corn was pulled down by the losses in soybeans according to Bennett. However, the market also faded the lower than expected crop rating at 68% good to excellent.
There was also bear spreading in the corn market which does not fit with the strong demand and exports still running ahead of USDA’s projections.
“I think the funds just continue to pile on to a bit of a short position here. But as you suggested, I mean, this crop’s not starting out as good as what a lot of people thought,” he says.
Yet, there isn’t enough of a weather threat to get the market excited according to Bennett.
“The seasonal would be that corn could have some sort of a, you know, a high put in place in June or May, June and July are the typical times that you see that June being the most prevalent. But you’re going to have to see, in my opinion, some further deterioration of the crop, because as of right now, the funds seem to have to interest whatsoever in owning this corn, even with really good demand,” he explains.
Bennett still thinks there is time for a normal weather rally in corn.
“I think that you’ll see a weather rally if you get into, you know, June, July and August, which is still predicted to be very dry in Nebraska, Iowa and the Dakotas.”
What Will Corn Acres Be in the Acreage Report?
With the excessive rain in parts of the Southern and Eastern Corn Belt planting has been slowed and there has been discussion about corn acres shifting to beans are even some prevent plant.
However, the corn market doesn’t act like its losing acres as Bennett thinks there were acres picked up in the Western Corn Belt this spring.
So what will the corn acreage number be in the June 30 Acreage Report?
He says, “I’m not so sure that the trade’s not banking on more than 95.3 million right now.”
Soybeans Also See Technical Selling and Pressure From Weather
Soybeans also saw technical selling after running into chart resistance with several key moving averages just overhead on the July soybean chart, but did hold the 200 day moving average.
Plus, soybeans followed the lower product markets as soybean oil is still searching for some certainty on the Renewable Volume Obligations or blending levels in the Renewable Fuels Standard as EPA has sent its draft to OMB.
Planting progress also weighed on futures with 76% of the crop seeded, 8% ahead of normal and more favorable weather forecasts ahead.
Wheat Supported by Lower Ratings
Wheat ended off highs, but still posted some gains tied to lower crop ratings on winter wheat at 50% good to excellent, down 2%. Spring wheat’s first crop rating was also well below expectations at 45%.
Cattle Futures Fail to Recover
Cattle futures traded two-sided early but closed lower again, despite the futures discount to cash and higher boxed beef values again at noon with Choice boxes up $2.92 to $364.77.
Are funds liquidating?
After the volatile ride on Tuesday due to a fake news story about New World Screwworm (NWS) the funds may be taking some profits off the table and exiting long positions.
Feeders extended Tuesday’s losses, with some pressure likely a result of USDA’s announcement of a significant escalation in its efforts to fight (NWS) through a strengthened bilateral strategy with Mexico. The government has pledged $21 million to modernize a fruit fly facility in Metapa, Mexico, which will be converted to produce 60- to 100-million sterile NWS flies per week–dramatically expanding current capacity and enhancing the reach of the sterile insect technique.
Lean hog futures were also up sharply on higher cutouts, the higher lean hog index and the unwinding of long cattle/short hogs spreads.
