Grain markets are mostly weaker with the exception of soybean oil to begin the last full week of trade during the month of March. We would expect mostly rangebound trade to persist this week as market participants square positions ahead of the March 31 data from the USDA. Weather patterns are improving ahead of the Midwest growing season. Soybeans on China’s Dalian Exchange were up 0.05% while soybean meal was up 1.08% and corn was up 0.70%. Mostly weaker trade in global equity markets overnight with U.S. futures looking to start the week on a lower note. Energy markets are weaker overnight but mostly stable following the sharp losses last week.
Later cattle contracts took a hit on Friday possibly in anticipation of the Cattle on Feed report. Actually, Thursday and Friday were not good days for cattle futures. Traders seemed to want to liquidate and take profits in case the report was not friendly to the market. The Cattle on Feed report showed that traders were probably too cautious about holding long positions as the overall report was neutral. On feed numbers were higher than expected at 102%, but placements were at 98% of what they were a year ago. Marketings were also at 98%, which may not make much different due to the adverse weather that was endured. This could be made up for in a short period due to strong demand.
Hog futures have not followed cattle in that they remain in a solid uptrend even though futures came under pressure Thursday. Bullish fundamentals continue to support the market, keeping traders confident any price correction will be short-lived. There is one caution that must be exercised, and that is that cutouts are becoming a little suspect and may be running out of steam. Packers may begin to hold back on their aggressive buying now that they have a supply of hogs procured ahead.
