The grain trade softens as it awaits Chinese confirmation of an Ag package.
Grain markets were weaker this morning, with wheat unable to hold an early 14-cent rally and the broader complex finishing the session on softer footing.
The market is still struggling with uncertainty around China. Without confirmation from Chinese officials that an agricultural trade agreement is finalized, and with no meaningful tariff reductions yet, traders are left trying to price a deal that may or may not translate into near-term demand. Normally, rapid planting progress and mostly favorable Midwest weather would lean bearish for grains this time of year. The difference now is the possibility that Chinese buying could expand into June, which is keeping some caution in the market when it comes to selling.
The report calendar is light. Weekly ethanol production will be released today, followed by export sales tomorrow, but neither is expected to carry the weight of a major USDA report. Positioning is also becoming a factor as traders prepare for the Memorial Day holiday, with markets closed next Monday. That could encourage more book-squaring as the week winds down.
Weather remains a key focus. Longer-range outlooks indicate warmer temperatures in the Midwest next week. That would be beneficial where soils are sufficiently moist, but it raises concerns in areas that are already drying out. The biggest stress is still showing up on the fringes, though more reports are surfacing from within the Corn Belt. At the same time, high diesel costs are reportedly prompting some producers to avoid replanting and reduce tillage, raising fresh questions about both acreage and yield potential. The safrinha corn crop continues to struggle with dryness, and is not getting much media coverage… for now. Weakness in the energy markets is adding another layer of pressure across commodities this morning.
Yesterday’s cattle trade reverted to a sharply higher feeder market, while live cattle had seen June put on over a dollar, while deferred live cattle contracts struggled to add gains despite strong upward movement in box beef values. Choice picked up $3.61 at $395.75, with select higher by $3.65 at $393.88. The feeder index was also higher by $1.83, at $369.46, with May feeders hugging that level and deferred contracts deciding they did not like the discounts they were carrying for the day. This continues to add to the volatility of the live and feeder cattle complex, with discounts always being the reason for renewed buying interest after heavy sell days.
This Friday afternoon’s Cattle on Feed report has estimates of 102.1% On feed, 90.6% Placements, and Marketings at 108.3%. August live cattle have resistance at 250-251 and support at 242-243 in this pinball range. August feeder’s strength yesterday needs to overcome resistance at 365-366; a close above 366 would change the technical outlook. Meanwhile, support is 357, then 352, which is a critical value that cannot be closed under.