OMAHA, Neb. – A lack of bearish news in the corn trade as Chinese logistical issues plague the soybean trade. Today’s analyst is Alan Brugler, president of Brugler Marketing and Management.
Wheat’s actually guiding corn today. You’ve got a pretty big rally in wheat after a technical breakout to the upside yesterday, and corn’s just kind of following along as another feed grain. There’s really nothing particularly bearish going on in corn right now, we’re waiting on the grain stocks report at the end of the month, and we’ve got some fund buying on dips here.
Soybeans are a little different matter. There had been some rumors for several days that the Chinese were canceling several purchases, either U.S. or Brazilian, or both. Brazilian basis has backed off quite a bit, and what that’s done is triggered some selling in the nearby March and May contracts; they’re rolling some of the longs to November, so it’s not down as much, but it looks like the Chinese got too many beans stacked up at the delivery ports and they need to slow down their imports and get that cleared out.
They were trying to roll [the contracts] forward – delay delivery – and at some point, you’ve got enough of those that you can’t make that happen. So they needed to basically cancel some, because they had too much coming in at one time.
The cattle market is still posting record highs on the box beef prices. We had new highs yesterday, which says that we’re able to get the consumers to pay up for the retail beef at the moment. Packer margins are decent; feeding margins are excellent at the feedlots.
The real question is: can we maintain that momentum once we get the seasonal increase in cattle marketings that we expect here later this month, and going into April?
Basically it’s a vertical move; it’s very speculative. The spec funds have got huge long positions – it’s all tied to the PED virus outbreak that we’ve had here in the U.S., and we know we’ve had several million head of hogs that have died of it, all young feeder pigs, even weaned pigs in some cases.
Problem is, nobody really knows what the number is. There have been estimates that summer hog marketings would be down 8% or 9%. That would translate into a huge futures rally, and that’s what we’ve seen.
What we’re going to get, though, is USDA’s going to have a hogs and pigs report on the 28th of March, and that will tell us what the real numbers are for summer.