AgDay TV Markets Now: Mike Zuzulo Says Row Crops Cautious Ahead of Report, Cattle Recover
AgDay Markets Now - Mike Zuzulo
Corn and soybeans see pressure again Wednesday, with livestock higher including cattle.
Mike Zuzulo with Global Commodity Analytics says farmers and funds have sold in the corn market the last couple of sessions with uncertainty on several fronts, including growing concerns about the USDA reports.
He thinks the trade is anticipating USDA's Quarterly Stocks Report will yield big corn and soybean stocks, but also corn acreage will come in above estimates. "Usually, the acreage number is going to pick a winner and pick a loser. It seems like the trade has already picked their winner in the beans as far as acreage base verses the corn."
A corn number above 92 million will likely trigger additional fund selling in corn according to Zuzulo. "We're still trading too much supply, not enough demand, of deflation. And so, we need to take the prices lower." he states.
He says Dec corn/Nov soybean ratio got to a three-month high on Wednesday's opening. That could reverse in his opinion if USDA's acreage base is not in line with the trade's thinking. "About a million less in soybeans and about 775,000 to a million more on corn," he adds.
Soybeans also saw pressure as AgroConsult upped Brazil soybean production 4 million metric tons to 156.5 mmt. It was a result of higher planted area of 1.2 million hectares than what Conab is currently estimating. He thinks this could mean higher soybean stocks in Thursday's report as the market has not fully taken into account the lower U.S. soybean exports due to Brazil competition.
Wheat ends mixed to slightly higher in May contracts.
Live and feeder cattle futures recovered from Tuesday. So, is the panic selling over? Zuzulo says it is and the funds are on hold right now. "I don't think you can signal the all clear yet because we are starting to see some slippage in negotiated cash cattle trade on Wednesday."