Grain and livestock markets end mixed on Tuesday with wheat, corn and hogs higher, soybeans and cattle lower.
Mike Zuzulo, Global Commodity Analytics, says wheat led gains in Turnaround Tuesday fashion, with short covering.
However, traders were also adding risk premium due to the low crop rating at only 38% good to excellent.
“If you live in wheat country you know that this crop is not getting in the ground and not getting up. We just aren’t getting the rain and I think it was a wake up call,” he says.
The emergence was only 56%, while it was 61% last year and many key production states are also lagging.
“The next 10 days are going to be critical with forecasted rains but I wonder if we won’t see some prevent plant in some of these states,” he adds.
He says that was a surprise to the market and triggered some short covering as prices moved back above some chart resistance.
Corn followed higher wheat but saw some selling pressure taken off with the crude oil market stablizing after Monday’s collapse.
Plus, demand has been strong for corn and with harvest past 80%, cash basis is starting to improve.
Soybeans set back on a trifecta of bearish factors including the improved weather in South America and the pick up in Brazil’s planting progress, plus their weaker currency.
However, Zuzulo says lower meal futures and China’s weak demand and meal prices also weighed on beans.
“China’s soybean meal market hit it’s lowest level since June of 2020 and weighing on the U.S. soybean meal market,” he explains.
China’s Producer Price Index has been down for the last 24 months which speaks to the weakness of the Chinese economy according to Zuzulo.
Both live and feeder cattle futures saw profit taking after Dec live cattle hit new highs for the move and ran into chart resistance.
The same was true of November feeder cattle, which hit resistance just below $250.
Meanwhile, hogs made more new highs on contra seasonal strength in cash and cutouts plus lower supplies.
