Grain were higher Thursday with livestock mostly lower, except live cattle.
Grains Soar With Crude Oil
Grains futures were higher led by wheat on money flow and a push from higher crude oil according to Allison Thompson with the Money Farm. She says, “The energy markets are obviously the big headline. We’re still getting a lot of geopolitical headlines from the Middle East. And obviously, what does that do to crude? So crude’s been the first one to move, as it should be, not a surprise, but it should also help our grains. Obviously, biofuels come into play. We’re also dealing with some trade and what happens to supply and logistics if this continues to play out longer. And I think that’s what we’re starting to see the market play out, is that maybe this is going to be a little bit longer than a couple of weeks.
Soybean oil saw the biggest push over 200 points higher and making more new contract highs. “Yeah, when we talk about biofuels, soybean oil screaming higher, over 200 points, and obviously hitting new contract highs. That’s that biofuels play you talked about. Yes, absolutely, and obviously that ties into the whole soybeans, but also canola. Canola was up really strong today, too. So oil seeds in general do have a good push coming just from the energy sector.”
Inflationary Buying in the Grains
The grain market is also seeing broader base buying by the fund community as grains are seen as an inflation hedge and are under valued she says. “We’ve seen funds start ti flip positions, and they don’t like being wrong. So if they start to hear more about this inflationary things, we’re talking about no rate cuts now, we’re talking about different things starting to make headlines, and those are things that do push the inflationary side. So, yes, typically we do see them become buyers. during times of inflation and crude rallying here, making some good highs, that all plays into it.”
Different Than 2022
The last time the markets says this type of rally was when the Black Sea war broke out in May of 2022, but this war is different according to Thompson. “Yes, absolutely. We’re not dealing with, you know, a big exporter of wheat that’s probably not going to be on the global market. We’re not dealing with anything than that. We’re still keeping the same players and the same production channels in check, but we’re just really concerned about what it does to transportation. We know that shipping costs have gone up in the area, and what does that look like as far as moving shipments around? “
This war is also expected to have a shorter duration and is not hitting the bread basket of the world. “It’s hard to know no one knows how long wars or you know, geopolitical issues are going to last. So it’s really hard to put an end date on it. But just talk of it being extended and extended and extended is giving us the momentum here to at least keep a risk premium as we move forward.”
Wheat Adding Weather Premium?
While wheat is seeing fund short covering, Thompson also thinks the market is adding some weather premium. “I think there is reason to do that. I’ve said that for actually quite a while, that we didn’t have any risk premium in wheat across the board when we were, you know, all winter dealing with five-year lows. Now we’re suddenly seeing some risk premium come in. And what we weren’t paying attention to and what we normally find during the winter is wheat having nine lives, and sees some kind of winter kill concerns. We haven’t had that this year like we have in previous years. So but we still have had some weather issues pop up. And it’s not only here in the U.S., but we’ve seen it in Ukraine. We’ve seen it in Russia as well. So the northern hemisphere starting to come out of dormancy could be a much bigger deal than the wheat markets currently giving it credit for. And we should start seeing more of that here as the month
Wheat Sees Chart Breakout
While corn and soybeans haven’t gotten above chart resistance, the wheat futures made new highs for the move. So can they keep going and get through resistance areas? “Well, it would be really good to see. I hope that we can, but obviously the market just keeps wanting more. I mean, we’ve been fed a lot of news here this week and we’ve had some good movement because of it, but the market’s going to still want more to keep going higher. And obviously points of resistance are kind of pivotal points, so it’ll be very interesting to see where we close for the week and also what kind of follow-through fund activity we also get here at the end of the week to kind of give us some proof of what’s behind the move.
Soybeans Waiting for China
Soybeans are still under Monday’s highs and may be waiting for proof of China business or a need a deal out of this April summit. “Obviously, we’ve been talking about it for quite a while that we’d like to see the demand come in. But another reason beans have been pushing so much higher and having good support is because of the oil sector. Oil has been really leading the rally, and that’s thanks to higher crude. So it’s not just looking at the export side that we’ve gotten the boost for. We also want to see the biofuel thing come through here too as we get into late March early April you know for for U.S. policy is going to be just as important as what we get for exports.”
Acreage Shifts
With the moves in grain prices, fertilizer and fuel will that change the acreage mix? She says, “I think it’s early to tell and especially in my area I know a lot of guys book fertilizer early and things like that where we’re not so susceptible to necessarily all of all of our needs being stuck in the market right now. So I don’t think it’s necessarily switched up a whole lot of rotations yet, but obviously there’s a lot of time between now and spring, and spring weather ultimately in fringe areas dictates what acres are gonna be.”
Live Cattle Bounce Back
Live cattle bounced back again on Thursday despite the fall in the stock market showing its resilience. She says that is because nothing has changed fundamentally. “I mean, supply and demand ultimately are what are running this market, and as long as that stays in place, that’s going to be key. And also cash. You know, cash market at the end of the day is ultimately going to side the strength in this market, and I think it’s holding in there pretty good. Yeah, and we’ve been holding that really key support with that 100-day moving average. Yes, we have. The 100-day moving average has definitely been a key line of support, and as long as that holds, it seems like we’re going to continue the upward trend.”
