Grains are firmer across the board overnight with the soybeans and meal once again leading gains. Most signs point toward a retest of contract highs for soybean prices. Soybeans on China’s Dalian Exchange were up 0.66% while soybean meal was up 2.59% and corn was up 0.28%. Farm and Ranch Director Jesse Allen has our morning reports for grains and livestock:
Firmer trade across the soy complex overnight with most contracts building on Tuesday’s higher close but not having taken out Tuesday’s highs just yet. The technical tilt of the soybean market has certainly turned up the last two sessions with the pennant formation which has been forming for the last several weeks looking as though it is resolving itself with an upside breakout. Brazil’s second crop corn planting is being estimated at 14% complete vs. 43% average which could push pollination into the dry season. However on the bearish side of the market, The Rosario Grain Exchange now sees Argentina’s soybean production at 49 mmt vs. the USDA at 48 mmt due to favorable February conditions. Also, the rally in corn oil and DDG prices have improved ethanol production margins with some plants clawing back into positive territory.
Cattle futures have become top heavy with the premium likely to erode further. The action Tuesday may have been a delayed reaction to the Cattle on Feed report, a pattern that has been seen at times in the past after previous reports. The market may be in trouble due to contracts breaking technical support, even though the market might be overall bullish. The break in futures does increase the potential that packers may not bid higher for cattle, even though they need them. They hope that lower futures might increase the desire of feedlots to sell rather than take the chance of holding them another week for no better than steady cash. But buyers may receive the directive from plants to buy at whatever price it takes to keep plants full and demand satisfied. Higher boxed beef should continue to provide support, but the concern is whether it will be enough.
Hogs again pushed higher Tuesday with only front-month April not making a new contract high even though it showed the most gain. Hog buyers are aggressive, continuing to bid higher. They want hogs now rather than playing the waiting game. Strong demand and room in cold storage is not a negative picture for price. The January Cold Storage report did show an increase of 11% from December, but stocks were 26% below a year ago. This could increase the caution of traders due to supplies increasing while prices escalated. Plants may be unwilling to move too much into storage at these high prices and may try to keep production closer to demand.
