Grain prices ended the day better than they started last night. Wheat futures led the way higher as futures were noticeably higher by the close. CBOT and KC wheat ended the day up 58¢ while Minneapolis spring wheat settled up 42¢. Old-crop corn futures settled up nearly a dime in May and up a nickel in July. New crop corn ended the day down one penny. May soybean futures were able to recover most of the early session losses to end the day down 12¢. New-crop soybeans were slightly weaker with a close down 14¢.
NOPA crush data released during trading was close to pre-report estimates. The rally in the wheat likely aided the soybean bulls throughout the day as there was no real momentum from the report.
Crude oil was under selling pressure all day on Tuesday. The April contract had just over a $9 range on the day. Even with the recent aggressive sell off, momentum indicators still have plenty of room to keep sliding lower. The low hit today was near the high hit on February 14 (old resistance becomes support). The next level of support is the 50-day moving average near $91.20. The bigger concern for the bull camp is the close today being under the 20-day moving average. This is the first close under the 20-day average going back to December 20. Will this trigger further selling?
April Feeder Cattle futures were able to rebound after the mid-day weakness to close out the day up 40¢. April Live Cattle was able to close 52¢ higher after a relatively quiet trading session. Boxed beef values from the morning report were up $1.49 on Choice and down $0.03 on Select. April Lean Hog futures ended the Tuesday session up 20¢. The midday cutout values were up $5.71 with noticeable moves to Ham (up $28.31) and to Belly (down $8.53).
Finally, we are hearing more buzz regarding the corn-to-soybean ratio being so low. At the close on Tuesday, the ratio was 2.25. At the current levels, there is no incentive for corn acres to shift toward soybean acres; you could even say that soybean acres are shifting toward corn. This story is more complex this year than most as so many cash crops are at high prices. This mean there is more flexibility for farmers to switch crop rotation a little to better accommodate the soil needs and not take a big financial hit. The big question becomes, what price will we have to see before acres shift?
Old-crop corn futures have turned positive after a weaker start to the day. May corn is 7¢ higher while July is 3 higher. December corn remains down 1. Soybean futures have also battled back from down more than 30¢ to down 8¢.
NOPA crush data was released today. The report stated crush at 165.06 million bushels. Trade estimates were 165.02 million bushels.
Wheat bulls continue to gain momentum as the trading day goes on. CBOT wheat is up 48¢, KC wheat is up 50¢, and Minneapolis wheat is up 30¢.
Crude oil is still down $6 on the day, but that is $3 off the low hit this morning. Strength in the stock market has likely helped crude oil bounce off the lows. The oil chart appears to have found support at the February 14 high. Crude oil bulls would like to see prices get back above the 20-day average by the close tomorrow.
Cattle futures did push above the Monday high earlier today, but have since given up those gains. Feeder cattle are down 92¢ while Live cattle are steady. Lean hog contracts are down 45¢ on the April contract. We are likely seeing some profit taking after the big move on Monday.
Finally, headlines regarding the negotiations between Russia and Ukraine are “ongoing.” Continue to monitor these headlines as they have the potential to impact futures markets quickly.
Corn and soybeans were hit with selling pressure overnight as traders are concerned about China lockdowns due to recent COVID outbreak. Traders are closely watching the negotiation talks between Russia and Ukraine once again today.
The May Soybean contract dipped below the 20-day average ($16.46) for the first time since mid-January. This is an important line to watch as prices have not closed below this moving average since mid-December. Two key levels of support for May soybeans are the March 4 low at $16.34 and the prior two-week low at $16.13. May corn should find support near last week’s low at $7.29 if the selling pressure continues.
Wheat prices are higher this morning. The wheat bulls have a goal to post consecutive days of higher highs and higher lows on the charts to regain the bullish momentum they had a few weeks ago. Reports from Ukraine ag analysts are suggest we will see nearly 40% less acres for spring crops compared with last year because of the war.
Crude oil is down nearly $7 this morning. Prices are down $34 from the high scored on March 7 at $130.50. RBOB gasoline is down 87¢ from its recent high, while ULSD (ultra low sulfur diesel) is down $1.60 from the March 9 high. Traders are suggesting that hedge funds are selling out of long positions. The CME Group increased margin requirements for many of the energy futures contracts in hopes of calming market instability.
Cattle futures opened higher on Tuesday morning while Lean Hog futures started the day lower. After the strong day on Monday, cattle traders would like to see prices surpass the 20-day moving average and close above the prior two-week high to confirm a change in trend. Lean hog charts are closing in on the contract highs hit on February 23.
Corn is currently down 1¢ to 6¢. Soybeans are down 18¢ to 22¢. Wheat is up 24¢ to 27¢.
Editor’s Note: Bob Linneman is a commodities broker with Kluis Commodity Advisors. Linneman grew up on a diverse farm in eastern South Dakota. Between milking cows, managing a beef herd, and farming various crops, he experienced many aspects of agriculture firsthand. After graduating from North Dakota State University with a degree in business, he moved to Hawaii with his wife. There he was an associate portfolio manager for a fixed income firm that managed $2 billion in assets. After nearly two years in Hawaii, he moved back to the Midwest and began his career in commodities. Linneman is licensed as a Series 3 and Series 30 commodity broker.