The grain markets have been on a bullish tear higher this week. Basis is screaming higher, futures are rising sharply and there is a lot of profit to be had in these markets as the trade is looking for supply. We finally heard of and saw some farmer selling yesterday as these prices are just too good to pass up (plenty of new crop sales were reported). The question is though, was there enough to stall this market out?
Overnight, row crops were slightly lower but finished off session lows. It will be interesting to see what happens when we open day trade today whether or not we use expanded limits in corn and wheat to trade lower, steady or higher. My gut says we will finally have a quiet day but that could all change with even one nugget of news this morning. These are very volatile markets and my opinion is, the time is now to make some incremental sales and/or gets some protection underneath you in case we run higher or start to fall. As Mike Zuzolo of Global Commodity Analytics told me, would you rather catch a falling knife or sell while the market is going up?
Overnight on China’s Dalian exchange, September corn was up 0.8%, July soybeans were up 0.7%, September soybean meal was up 0.9% and September soybean oil was up 1.2%. July common wheat on China’s Zhengzhou exchange was unchanged. June Malaysian palm oil is trading down 0.4%.
Feedlots were looking at the market Thursday with only one eye open, and they were squinting with the open eye as well. It was painful to watch as cattle futures posted triple-digit losses in numerous contracts while corn prices rocketed higher. Cash traded lower and packers were able to extend their purchases further into the future. This does not bode well for the near term. Boxed beef closed nicely higher Thursday, but although friendly, the focus was on grain prices.
Hogs suffered losses Thursday, but not quite to the extent of cattle. However, it solidifies the idea that the top is in. Now that does not mean that futures will continue to weaken, but that futures will not return to new highs anytime soon. It seems like the order of business technically will be to close the price gap in the May contract at $105.95.
Overall, it’s this humble broadcaster’s opinion to really examine your marketing plan and try not to let emotions rule the day. This is a time of great profitability that could set your operation up for the next few years. Trade smart and trade wisely.