Grains start mixed but quickly move higher extending gains from Monday’s risk on session.
Kent Beadle, Paradigm Futures, says wheat led the rally Monday and continues to show leadership due to lower crop ratings, putting in weather and war premium.
USDA reported the U.S. winter wheat crop is rated at 50% good to excellent, which is down 5% from the previous week with the poor to very poor category increasing 3% to 16%.
Most of the deterioration in the crop came in the Hard Red Winter wheat crop where farmers have seen heat, wind and even some frost. Oklahoma led the drop in ratings down 11%, top producer Kansas dropped 7%. Meanwhile, conditions have improved in the Soft Red Winter wheat areas with Illinois improving 5%.
Beadle says there is some rain in the extended forecast for dry HRW areas, but so far earlier predicted precipitation has been disappointing.
Globally, there are also crop concerns in the Black Sea and Australia due to dryness and in Europe with freezing temperatures. As a result, Paris/Matif wheat futures have been climbing.
Beadle also thinks the markets have been adding war premium as the fighting has escalated in the Black Sea with Russia targeting key grain infrastructure in Ukraine’s port areas.
Corn and soybeans have been following wheat but also technically wheat and row crops have broken above key moving averages. Kansas City wheat is above the 100-day moving average with corn closing above the 50-day moving average. That is forcing some of the speculative traders to cover short positions.
Planting progress was ahead of the five year average for corn at 12% and soybeans at 8%, but recent rain in the corn belt and more in the forecast for Thursday and Friday may start to catch the attention of the trade.
Cattle try to extend gains after a push from bullish placements in the Cattle on Feed Report and the continued stabilization of the equity markets.
Beadle says hogs are following cattle but also seeing seasonal strength in the cash and cutout values to help support a rally. “I think its possible hog futures could go back and retest the contract highs at some point,” he says.
