Is The Grain Train Picking Up Steam?

Grain and Oilseeds Wrap Up

The December Chicago and Kansas City wheat markets posted gains of nearly 40 cents for the week.

The wheat markets got the party started early today with gains of more than 20 cents on reports a major shipping lane will be shut down for a few days for Russia’s wheat exports due to new attacks by Ukraine. The monthly WASDE report saw reductions in U.S. wheat carryout, U.S. production and world carryout to keep prices supported through the closing bell. The 6.80 to $6.90 zone has been a key area of resistance for the KC December contract a few times so follow through strength will need to be seen quickly early next week. Today’s rally is a good spot to reduce upside exposure.

November soybeans were up 43 cents for the week.

Soybean prices turned overnight session losses into gains during Friday’s session following another USDA report that wasn’t as bearish as expected. New crop U.S. soybean carryout stayed unchanged at 310 million bushels while the average trade guess called for a 20 mb increase. The November contract moved to within a penny of $12.00 at one point and again saw buying interest lose steam. Weather forecasts will have to keep hot and dry risks in place to help prices sustain a move above $12.00.

The USDA reported an export flash sale this morning of 264,000 metric tons of soybeans to China.

December corn was 19 ½ cents higher for the week.

USDA data was friendly for the corn market with old crop carryout falling 125 million bushels thanks to a higher feed use estimate. The only adjustment to the new crop balance sheet was a 50 million bushel increase in the export forecast. New crop U.S. corn ending stocks slipped to 1.790 billion bushels from 1.960 previously while world corn carryout was trimmed by 2.5 million metric tons. The December contract has so far seen stiff resistance just shy of $4.67, the spot where the 50 and 200-day moving averages converge. Bulls want to see a breakout beyond that level and it’s probably going to take hot and dry risks in extended forecasts to keep momentum pointed higher.

Cattle

August live cattle were down $4.00 for the week while August feeders were down $6.50 for the week.

Ongoing weakness in the cash cattle market and falling beef cutout values leave the path of least resistance to the downside for cattle futures. August live cattle extended their move to a fresh low for the current downslide on $2.00 to $3.00 losses before making a late-day recovery to minimize the damage. Deferred contracts would maintain losses of more than $1.00. August live cattle need to hold above 200-day moving average support that sits at $231.40 to avoid shaking loose the big long fund position. 

Inability to capitalize on Wednesday’s upside reversal action put buying interest back on the sidelines for the remainder of the week in the feeder market. August feeders took on losses of nearly $5.00 before prices were able to bounce off session lows. Prices are approaching key support at the 200-day moving average that currently sits at $349.50. The market has spent some time below that moving average and it took screwworm entering the U.S. to reignite upside momentum. If cash markets and cutout values keep sliding, downside risk may not be out of the way just yet.

Hogs

August hogs were up 30 cents for the week while October hogs gained $3.00 for the week.

August hogs are keeping an uptrend intact, but still need to clear the $100.00 barrier for a convincing upside breakout. Mostly sideways cash markets and pork cutout values are keeping a lid on big upside momentum in the front month contract. October hogs saw fireworks come on Wednesday with gains of nearly $4.00 and then consolidation near $85.00 to finish out the week. We see the next upside target area around $88.00 if a few more fund shorts can get squeezed out of positions 

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