Wheat exchanges close in the red | Thursday, April 28, 2022

The corn was quietly mixed. Soybeans fell 15 cents in May and 4 cents in November. All three wheat exchanges closed in the red today with CBOT down 8 cents, KC down 12 cents and Spring Wheat down 12 cents.

May grain contracts have first notice tomorrow, which means many traders have moved their positions to July contracts or later. Historically, we’ve seen contracts move wildly once they enter the delivery window. One reason may be a lighter volume. Another can be when adverts need the grain and want to take delivery. One to watch if any of these scenarios play out before the contract expires in a few weeks.

Feeder cattle managed to end the day in the green for most contracts. The April contract was down 22 cents, but the August contract was $1.62 higher in today’s last trade. The live cattle struggled all day and ended up in the red. The April contract was down 72 cents and the June contract was down $1.17. Lean hogs were 67 cents higher in June and $1.42 higher in August with today’s latest trades.

Crude Oil managed to build positive momentum all day. Shortly after 2:00 a.m. today, futures were $3.50 higher near $105.50. Recall comments earlier today that trendline resistance should be reached near $105.70. RBOB gasoline hit its highest level since March 9. Although the chart may suggest a push towards contract highs, the demand situation has to be on the bulls.

The US Dollar looks set to break above 104 this week. The strong pattern of higher highs and higher lows that began on April 21 tells traders not to fight the trend. The bears are likely to battle the March 2020 high at 103.96, but will they have enough strength to limit any further upside?

Noon commentary: 12 p.m.

By midday, corn futures are about a nickel higher. Soybeans are down 15 cents in the May contract and 1 cent in November. Wheat is mixed as the CBOT is up 5 cents. KC is down 2 cents and Spring Wheat is up 5 cents. Many farmers are surely trying to get to the fields today ahead of the expected rainfall in the next few days.

The Drought Monitor was released today showing 45% of the United States in moderate to exceptional drought. Nebraska, Kansas, Oklahoma and Texas form the eastern border of the main problem area.

Reports on the progress of Ukrainian seedlings suggest that they have planted around 25% of the spring crop. They face many obstacles, including debris, unexploded bombs, landmines, and low fuel supplies. Officials hope to be able to get 75% of the area planted in the spring.

Livestock futures have been improving since morning trading. Feeder cattle are mixed with April down 20 cents and August up 75 cents. April live cattle are up $1 while June is down $1.25. Lean hogs are trading higher with June up 80 cents and August up $1.20.

The US Dollar is still hovering around the 103.60 mark. After coming within 0.01 of the March 2020 high this morning, the bulls appear to be content to swing back and forth at this level.

Crude Oil is up $2.40 at $104.42. Crude bulls got fresh money inflows after breaking through Wednesday’s high. Overhead resistance stands near $105.70 today as a descending trendline from previous highs appears to be formidable resistance.

Opening Commentary: 9:00 a.m.

Another daily export sale was announced this morning. A total of 1,088,000 metric tons of corn sold to China. Of the total, 476,000 were old crop and 612,000 new crop. With the big corn sale, we could have expected a sharp rise in corn prices. Futures briefly started higher, but a few minutes after the 8:30 open traded slightly lower and are now quietly higher. Soybean prices fell this morning. May is down 12¢ while New Crop is down 3¢.

The weekly export sales report was released this morning. The ratio was disappointing for wheat, low for corn and near the top for soybeans.

Livestock prices are mixed this morning. Feeder cattle try to rebound as August is up 90¢. Live cattle are quietly higher with April up 50¢ and June up 20¢. Lean Hogs are trading the opening lows of 65¢ to 75¢.

The US economy is contracting in the first quarter of 2022. We fell from 6.9% growth in the fourth quarter of last year to -1.4% contraction. The average estimate for the report was a slight increase of 1%. Traders have to decide if this is a one-time report and if things will return to small positive growth in the next quarter or if this is the start of a very worrying trend in the US.

Crude Oil is up 50¢ near the 102.50 mark this morning. The US Dollar continues to climb as futures are up 0.74 points today at 103.70. The high so far today came within 0.01 of the March 2020 high. Keep an eye out for what happens if prices can break above this key target.

About the Author: Bob Linneman is a commodity broker at Kluis Commodity Advisors. Linneman grew up on a diverse farm in eastern South Dakota. Between milking cows, managing a herd of cattle, and growing various crops, he experienced many aspects of agriculture. After earning a business degree from North Dakota State University, he moved to Hawaii with his wife. There he was an associate portfolio manager for a fixed-income company that managed $2 billion in assets. After nearly two years in Hawaii, he returned to the Midwest and began his career in commodities. Linneman is licensed as a Series 3 and Series 30 commodity broker.