CORN trade is talking perhaps 1 million cattle now backed up in the pipeline awaiting slaughter. Seeing similar complications in both the pork and poultry sectors. There is talk that President Trump is going to mandate that processing plants stay open in order to avoid a food problem here in the U.S. Bears are pointing to the fact, regardless of the President’s move to keep the processing plants open, it’s highly doubtful corn for feed can meet the USDA forecast, which was estimated to be the highest in over a decade. At the same time, bears are pointing mostly cooperative U.S. weather and a very quick start to the planting season. The forecast is also showing a bit more moisture in some of the dry parts of Brazil. The trade will continue to closely monitor weather, crude oil, the negative impact on ethanol, the backlash in livestock being created by meat processing plant closures and reduced run rates, and the continued export uncertainties surrounding China.
SOYBEAN traders continue to debate Chinese demand and how many U.S. new-crop acres will be planted in 2020? At the moment, bears remain in control as Chinese buying of U.S. supply is somewhat limited by cheaper offers out of South America. At the same time, the trade continues to hear talk of a few more U.S. acres flipping to soybeans. Not than any producers are making huge adjustments or changes in planting but rather small tweaks towards a few more soybean acres. This makes the trade worry that more acres than currently estimated by the USDA could be in play.
WHEAT bulls are pointing to more rumors and talk of tours across Kansas and Oklahoma showing more damage than the trade might be anticipating. Bears are pointing to improved rainfall in some dry areas of Europe and the Black Sea region. Technically, it feels like the market is content sloshing around near major moving-averages, but there’s really nothing significant enough to break the recent pattern of lower-highs. As bulls, we need to see U.S. export demand gain more momentum, and weather worries become more widespread.