Grain ends the day lower | Monday, March 28, 2022
Although corn was able to end the day off the lows, May was down 5¢ while December was down 4¢. Prices recovered enough to settle near the 20-day average. Lower lows tomorrow would not be a good sign for the bull camp, as selling momentum could increase the further we get away from the 20-day average.
May soybeans initially found support at the 20-day average this morning, but that line did not hold as the day went on. Selling pressure increased as no buyers stepped in to buy the rest of the important moving average. May soybeans ended the day down 46¢ while new crop was down 28¢. The prior two-week low in May soybeans is the March 15 low at $16.38. A test of this line should be well supported by the bulls. If not, $15.79 is the next major level of support.
April feeder cattle slid lower on Monday closing down 75¢. April Live Cattle was able to bounce off the low of the day to settle down 17¢. Lean hog contracts traded on both sides of the tape today and closed out up quietly on the day.
Crude oil had recovered some of its early session losses at midday, but the bears took back control and pushed to new lows by the close. Just before 3:00 p.m., prices were down nearly $11 on the May contract as prices were struggling to hold onto the $103 mark.
The U.S. dollar index is establishing presence over the 99 mark early this week. Upside target remains at the March 8 high of 99.47 on the June contract.
As more bird flu cases are being reported in the U.S., Minnesota has been added to the growing list of states confirming cases. Canada was unable to prevent the pathogen from crossing the border, as reports suggest the first cases have been confirmed.
May corn is down 9¢, which is a nickel off the low. The low today is right on the trend line support drawn from the March 2 low and the March 16 low. Futures did break below the 20-day average and remain below that line at this time. A convincing close below this support level could trigger further selling pressure.
May soybeans are down 41¢, which is below the 20-day average. Prices have not closed below this line by more than a penny since December 13. Will we see the bulls step in and buy the dip? Key levels to watch for November soybeans will be the low from last week at $14.66 and the low from the week before that at $14.51.
Corn and soybeans have not been able to gain any bullish momentum this morning, even after the confirmation of a 132,000-ton sale of soybeans to China and 127,9200-ton sale of corn to an unknown buyer reported this morning.
Crude oil remains under heavy selling pressure. The May contract is down $6.90. RBOB gasoline is down nearly 22¢ while ultra low sulfur diesel Fuel is down 23¢. Energy prices are seeing traders react bearishly to the lockdown in Shanghai. Fears that demand will take a big hit is creating the bearish reaction.
Feeder cattle have turned negative. April is down 85¢ while May is down 40¢. Live Cattle are down 50¢ in April and down $1.20 in June. April Lean hog futures have managed to trade above the Friday high, and found new willing buyers to push convincingly above the Friday high.
Corn is down a dime, soybeans are down 25¢, and wheat is leading the way lower as futures are down 34¢ to 46¢. Will we see positive results from the planned Ukraine-Russia talks on Tuesday and Wednesday this week? The USDA Prospective Plantings and Quarterly Stocks report is due on Thursday, March 31. We are likely seeing some position adjustments ahead of that report as well.
Livestock are quietly mixed this morning. April feeder cattle are down 40¢ while the May and August contracts are up 25¢. April Live Cattle are down 25¢. Lean hogs are also slightly lower this morning as the April and June contracts are down 10¢ to 30¢ respectively.
The crude oil market is being hit with aggressive selling this morning as the May contract is down $8.90 at $105. The selling pressure started out last night and has intensified. We are approaching the 50% retracement mark of the March 15 low and the March 24 high.
There are two big questions traders are considering regarding the crop in Ukraine this year. First, can Ukrainian farmers get to the spring planting during the normal time frame given the ongoing war? Second, will they risk trying it, even if they can? Put yourself in their shoes … there is not an easy answer to this horrible situation.
Editor’s Note: Bob Linneman is a commodities broker with Kluis Commodity Advisors. Linneman grew up on a diverse farm in eastern South Dakota. Between milking cows, managing a beef herd, and farming various crops, he experienced many aspects of agriculture firsthand. After graduating from North Dakota State University with a degree in business, he moved to Hawaii with his wife. There he was an associate portfolio manager for a fixed income firm that managed $2 billion in assets. After nearly two years in Hawaii, he moved back to the Midwest and began his career in commodities. Linneman is licensed as a Series 3 and Series 30 commodity broker.