Kent Beadle with Paradigm Futures says corn and soybeans are seeing profit taking and farmer selling after hitting chart resistance on Monday. See more from Kent’s interview with Michelle Rook
This morning, we’re seeing mixed trading in both grains and livestock futures. Notably, corn and soybeans are setting back. This retreat is largely due to hitting chart resistance; corn reached highs just under $4.60 last week, only to uncover farmer selling as we moved past the New Year, potentially driven by cash flow needs. Similarly, soybeans experienced a sell-off on Friday but rallied back most of the losses by Monday. However, this morning’s trade reflects further farmer selling, possibly due to the market running into resistance again.
Market Influences
- Corn: The high last week and the subsequent rally into resistance areas have prompted some farmers to sell, especially after the New Year when they might need cash flow.
- Soybeans: After a significant correction on Friday and a recovery, there’s been more farmer selling, possibly due to the same resistance levels.
Short-term Market Movements
- Meal Prices: An unexpected downward reversal in meal prices has set a bearish tone for the morning’s trading in soybeans.
- Commitment of Traders: Yesterday’s report shows funds have increased their long positions in corn but covered some of their short positions in soybeans, indicating a complex market sentiment.
Weather and Policy Impact
- Weather Forecasts: The market might be reacting to more moderate weather forecasts for Southern Brazil and Argentina, suggesting less concern about drought impacts.
- Tariff Talks: On-again, off-again tariff discussions by the President continue to influence the market, with yesterday’s reports suggesting more targeted tariffs, which markets seemed to like, until contradicted by the President’s social media comments.
Livestock Futures
- Cattle: Live and feeder cattle futures reached new highs yesterday, driven by strong cash trade. Despite some pullback today, the bullish fundamentals due to tight supplies and high demand suggest potential for further gains. The situation at the Mexican border for feeder cattle adds complexity.
- Hogs: The hog market has turned bearish with prices now below key moving averages. With a significant speculative long position, further liquidation seems likely, potentially dropping prices by another $5 to $10.
Market Outlook
The markets are navigating through resistance levels, weather changes, and policy uncertainties. While corn and soybeans are experiencing pullbacks, the livestock sector shows varied movements with cattle still bullish but hogs facing downward pressure. Traders should keep an eye on upcoming USDA reports which could further steer market directions.
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