Grain bulls recover some losses. Wednesday, March 30, 2022

Grain bulls were able to recover some of the losses sustained earlier in the week as prices rebounded on headlines of Russia military resuming advancements. These headlines will continue to keep traders at the edge of their seats.

The big March USDA Prospective Plantings and Quarterly Stocks report is due tomorrow at 11:00 a.m. The pre-report range for where acres will fall is rather wide. If the actual data comes in somewhere near the high or low end of that range, we could see prices move more than currently expected.

Corn ended the day higher. May was up 12¢ and new crop was up 3¢. December 2023 corn was up 6¢ at the close. The December 2023 contract hit a new contract high and closed at the highest price so far at $6.07.

Soybeans were higher at the close, but well off the intraday highs. May was up 21¢ while November was also up 21¢. The spread between the July and November contracts settled the day at $1.73. That means the July is $1.73 over the November. The recent high on the spread was $2.03 and the recent low is $1.58. If this spread starts to move higher, it would be a good sign for the bulls.

Livestock prices ended the day lower. Feeder cattle were down 32¢ to $1.20. Live cattle were also lower by 45¢ to 75¢. April hogs were the softest today as futures were down $1.57 on the last trade today.

Crude oil settled about $3.50 higher on the day at the 1:30 closing bell. The market did maintain most of that strength through the remainder of the day. The oil bulls need to post consecutive days of higher highs and higher lows to take back control of momentum. Today was day one.

The headlines from this morning are still holding at midday. Russia has indicated it will resume the offensive in Ukraine. Recall the headline of Russia holding steady yesterday? The game of headlines is here to stay for the foreseeable future.

Grain prices remain in the green at midday, but well off the session highs. May corn is up 13¢, while December is up 8¢. May soybeans are up 30¢, as November is up 24¢. Wheat is up 20¢ to 30¢ across the three exchanges. The bulls would love to close over moving average lines that did not hold yesterday. A brief time below key moving averages can be overlooked, but consecutive days closing below technical support will likely trigger further selling.

Ukrainian ag officials have said spring planting has begun. Traders are optimistic, but have lots of questions about many of the details that are nearly impossible to get answers for.

Some concern for the corn bull camp is the ethanol stocks report from this morning. Ethanol stocks rose to a near two-year high with 26.5 million barrels. The chart comparison between the last few years will surely cause some concern from the bulls unless this trend reverses soon. Gasoline demand is down dramatically over recent weeks as prices have reached levels that are curbing demand in the United States.

Livestock futures remain lower on the day, but have rebounded off the early session lows. April feeder cattle are down 40¢ while the May contract is down 32¢. April Live Cattle contract is down 45¢ as June is down 15¢. Lean Hogs remain under selling pressure in the April as prices are down $1.57. The deferred months are down 15¢ to 25¢.

Crude oil is still in positive territory at midday with futures up $2.50 in the May contract. Energy traders are surely getting exhausted trading the multiple headlines every day and digesting the supply and demand reports that are scheduled on a weekly basis.

Headlines this morning from Russia suggest its forces are preparing to resume offensive operations. As mentioned yesterday, the headline risk is not going away. The trading firms that rely on algorithms to trade headlines are being whipsawed day to day. This is likely part of the reason why we have seen volume decrease over the last month.

Grains are recovering some of their early week losses. May corn is up 20 cents while December is up 13. May soybeans are up 33 cents while November is up 26. Wheat is up 20 to 25 cents across the three exchanges this morning. Also important to watch is the bull spreads. They are recovering today as well, which is a good sign that we may have put in an important low yesterday.

USDA reported a flash sale of 128,000 metric tons of soybeans to Mexico this morning. This sale is slatted for new crop marketing year.

Livestock are softer this morning, presumably because of the stronger grain market. April feeder cattle are down 85 cents while the May contract is down $1.15. April Live Cattle contract is down 40 cents as June is down 32. Lean Hogs are also lower to start the day as the April contract is down 57 cents and June is down 12 cents.

Crude oil is recovering today as well after a rough start to the week. The May contract is up $4.25 near the $108.50 level. RBOB gasoline is up 12 cents while Ultra Low Sulfur Diesel is up 16 cents. The energy traders are watching the headlines all day long. The up and down rollercoaster the energy market has been on is likely to stay in place until the war is officially over.

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Tags: corn, prices, soybeans, hogs, futures, live cattle, livestock prices, feeder cattle