Grain and livestock markets ended mostly lower on Wednesday.
Mark Schultz, Northstar Commodity, says corn and soybeans saw pressure from some rain added to the 11-15 day weather forecast in Argentina and Southern Brazil and USDA report positioning.
However, he says South America would have to have a more pronounced drought and cut production over 15 MMT to have a major impact on the market.
Friday’s USDA reports aren’t calling for big changes in yield, production of U.S. ending stocks.
However, the Quarterly Stocks Report may be the one that provides evidence of the dry conditions at the end of the season that resulted in lower yields for both corn and soybeans.
Stocks estimates are fairly close to last year but the spreads have been suggesting a smaller corn crop than advertised.
Wheat saw technical selling with lackluster export demand and a higher dollar index serving as a headwind for the market.
Live and feeder cattle futures ended sharply lower on profit taking and hedge selling after hitting another round of fresh highs.
The markets were overbought and due for a correction so Schultz isn’t sure the reversal signals a top.
He is watching the action Thursday because follow through selling will be needed to confirm a change in trend and even then the futures discount to cash will be supportive.
“We have record cash trade and as long as cash stays strong that will prevent a big correction in the futures,” he says.
Cash will also trump the reopening of the Mexican border to feeder cattle according to Schultz.
News reports indicate APHIS will start accepting imports the week of Jan. 20 although USDA has not released anything official yet.
Lean hog futures ended mostly lower and have continued to see fund long liquidation as the market has busted through key moving averages including the 100-day and the 200-day.
However, he says softer cash and product values have also been a culprit.
