Corn gave back yesterday’s gains, following the negativity of wheat and the pressure of Argentina beginning to become more competitive in the global export market. Technicals still support the view point that we may have a good low in place, but only shifting fundamentals will reassure that the low in place is long-term. Ethanol production jumped by +19,000 bushels this week, while stocks shrunk from 20.2 million barrels to 20 million barrels. These factors are supportive, but a trend will need to be established, as well as a turn-around in crude, before they begin to be a strong fundamental that is supportive higher.
Soybeans continue to trade frenetically under light volume and largely bearish fundamentals. At the head of the list of bearish fundamentals appears to be forecasted rains for Central Brazil and vegetative health index information that says that while not a record yield, above average yields could still be possible for Central Brazil. Argentina may also be poised to sell old beans aggressively before Brazilian harvest begins in February, and crush margins continue to hover between .55 – .63. Surprisingly, value buying is still supportive this market which is quickly developing a knack for trading positive in the face of the most bearish fundamental news releases. Resumption of regular trade will be essential at forecasting the sentiment of the market, but for now a sideways to lower bias still seems in order until more is known about the size of the Brazilian crop and the preference of Chinese soybean demand.
Despite adverse conditions both abroad and at home, funds continue to pile on to wheat pushing KC and Chicago wheat back toward their contract lows set at the beginning of December. A hard freeze and light snow cover in the Western part of the former Soviet Bloc could cause extensive damage to a crop that has already endured substantial stress. Overly wet and soon to be freezing conditions could do the same in eastern and southern Midwest and Delta, but for now light volume and huge shorts could keep market reactions muted unless forecasted damage can be proven.
Cattle moved aggressively higher today as cash trade in Kansas and Nebraska at $134 gave the market fuel to rally further. This development was necessary if cattle ae going to have a chance to continue higher, as the cash markets have lagged significantly behind futures to this point. Hogs firmed into the close after coming into pressure, but overall had a fairly benign trading day.
Closing Market Snapshot
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