Wheat market seeing export challenges


Wheat markets ran into selling after failing to push beyond recent highs. News that India was lowering its floor price for exportable wheat was the primary negative factor since now they will be competitive with the Black Sea and Europe.

The trade estimates that wheat exports by India could reach 7 MMT, 30 percent higher than last year. Still supportive to the wheat market are the ongoing production problems in Argentina and Brazil; and now Australia has seen some losses due to freezes on wheat that was in the flowering or filling stages.

Corn continued to slip lower as the ongoing harvest and high yields have removed most of the bullish sentiment from the market. There is definite support, however, at contract lows as producer selling dries up and buyers still need corn moving into the pipeline.

The soy complex was mostly weaker with a round of profit taking that pulled soybeans and meal lower while offering support to bean oil. Harvest is approaching completion for beans and hedge pressure is expected to be minimal from this point forward.

The cattle complex was mixed with feeders running into selling pressure after failing to test their all-time highs from two weeks ago. The growing sentiment that corn has likely carved out its seasonal low is adding to the negative tone for the feeder complex.

In addition, cash auctions yards reported that demand for calves has softened and prices were lower for most weight classes over the last week. Live cattle were mostly steady even as cash markets surged into new all-time highs and boxed beef values surged higher as well. Market ready cattle remain very tight and packers are struggling to get enough product bought, forcing them to bump cash prices over the last two weeks. But futures have failed to move back to their highs, leading traders to suggest that seasonal highs are coming in early this year.

Crude oil was largely unchanged while the products found solid support. Reports of shortages of propane in the Midwest due to huge demand from corn farmers trying to dry down their harvested corn have contributed to the product strength. Dow futures pushed above the high from a month ago as the FED announced it would leave its bond buying program unchanged, giving confidence to stock traders that more money was certain to be coming into the market.

Metals found support from that notion as well, with traders believing that, eventually, the huge money creation by the FED will ultimately lead to inflation. Courtesy sidneyherald
By Louise Gartner Spectrum Commodities

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