April 2, 2019
Planting intentions came out last Friday, showing bigger acres for corn, smaller acres for beans, and substantial carryover in both the United States and the world on corn and soybean stocks.
The numbers caused a major breakdown in the corn market. We went back to levels that we haven’t seen since Sept. 18 of last year.
The market opened again Sunday night and so far has held those lows. If we can hold in here it would be good since we are at major support. Funds have carried a heavy short position in the grains and have added to it as the market has vacillated back and forth.
We continue to encourage people to cover their feed needs because they are below the cost of production.
Also we would establish long calls since we are close to planting time. We have a wet spring underway and more precipitation forecast in the future.
These markets have a huge short position in the grains, huge long position in the cattle, and their volatility has been enormous in the livestock in the past few days.
Over the weekend, President Donald Trump stated he may close the border to Mexico for all goods. We do a tremendous amount of trade everyday — both importing and exporting — with Mexico.
They are our No. 2 importer of corn and No. 1 importer of pork.
We in turn buy a lot of the products that are produced in Mexico as both parts and completed items. We need for this market to remain open to maintain trade.
How we deal with the increased immigration from Guatemala, Honduras and El Salvador remains to be seen.
Friday we experienced a volume contract high day in the corn market, which coupled with the low that it made may indicate a very strong bottom. We will have to watch this very closely.
Beans did not indicate a bottom except for the July contract, which was the volume contract high day.
However, in this market we have a saucer-type top, which indicates we could go to the $8.63¼ low basis July which occurred on Sept. 18.
The April cattle chart went back down to the 100-day moving average, which is at $125.80. Stochastics have run relatively low, and last week both Dunlap and Denison traded cash cattle slightly higher.
On the interior, we have seen cattle trade lower in the Southwest and lower in the Midwest last week. Today, Dunlap is trading quite a bit lower than last week.
The $128 price was good support on April live cattle futures and $121 on June cattle. I feel as if these two levels will be big resistance for those two future months.
Composite box meat came in at 1,239 loads for 22-day-and-up sales; NAFTA 131 loads; and overseas exports 937 — meaning total numbers are good.
We want to watch deferred cattle. If corn would bottom, deferred cattle would probably go on up, feeders would feel pressure and hogs could probably rally.
Funds took profits at the end of the month on their long cattle positions and short corn positions.
Good luck and good marketing.
This weekly report is for informational purposes only and is not to be construed as an offer to sell or a solicitation to buy the commodities listed herein.