Grain Market Reacts to Vietnam Trade Agreement

On Wednesday, everything related to green grains and livestock was finishing up the greens.

Grain market sees a boost from Vietnam trade agreement

According to Oliver Sloup from Blue Line Futures, the uptick in the grain market can be attributed to a mix of short covers, technical buying due to extended holiday weekends, and particularly, the news of a trade deal with Vietnam.

“It’s likely a combination of several factors: the long weekend, the trade deal, and possibly more updates coming soon. President Trump is expected to make remarks in Iowa on Thursday, which might shed more light,” he said.

Sloup added that the USDA report initiated on Monday, triggering a swift market shift focused on weather updates, while the market was also eager to find new narratives.

Corn futures experienced a dip on Tuesday, prompting some selling off and setting the stage for a bounce-back, as funds began targeting the short side of the market.

However, Sloup mentioned that corn is approaching a critical juncture as it heads into the weekend, seeking to break through significant overhead resistance on the charts.

“We’re revisiting some technical levels that could act as important benchmarks. Particularly with the December corn contract, which previously served as support back in March, April, and May. It’ll be crucial to keep an eye on the corn contract next week to see if it crosses these lines,” he explained.

Soybeans are seeing rapid gains alongside related products

Soybeans enjoyed a rise of 20 to 24 cents, thanks to rallies in both soybean oil and meal, especially after finding support on Tuesday.

Sloup noted that while November soybeans hit new lows this Tuesday, they managed to maintain support around $10.15, which he found quite remarkable.

Post a significant gathering on Wednesday, soybeans encountered some chart resistance.

“The numbers range from $10.31 to $10.38 over the past 20, 50, 100, and 200 days. This consistency over the past month suggests we’re nearing a shorter inflection point,” he added. “Should the market exceed these levels, we could see rallies between $10.65 and $10.70. Unlike corn and wheat, funds in the soy market aren’t short, so it might need more optimistic news regarding trade and weather to keep buying.”

Wheat market experiences short covers

Sloup remarked that the wheat market gained traction on Wednesday due to a lack of funding over recent years in the wheat complex.

“The travel of the 20-day average is around $5.52 to $5.56. This was the Chicago price in September, and we are eyeing a target of $5.70,” he said.

To break through these levels, the market will need pertinent weather reports, either from the U.S. or globally.

Cattle futures rebound

Cattle futures initially opened lower but reversed course following the announcement of the Vietnam trade deal, despite a gradual reopening for Mexican cattle imports.

This news could have increased interest, given the current weak cash trade and futures prices reflecting discounts.

In Nebraska, light trades were observed, fluctuating between $368 and $370, more consistent than last week. The live sales were noted to be between $230 to $232, with Kansas seeing prices around $224 and Texas between $222 to $224—showing more stability than average weights from the previous week.

Despite the positive turn, Sloup expressed uncertainty about whether the reopening of the border is fully factored into feeder cow futures pricing.

The live cattle figures are nearing the top, with nine out of ten months reaching close to peak levels, though Sloup believes potential tops might still be looming in this market.

Pork futures rise on Vietnam news, but is this the peak season?

Pork futures responded positively to news from Vietnam regarding trade, which could benefit pork exports.

Nonetheless, Sloup indicated that the market remains at contract highs, suggesting that any potential peaks could align with seasonal trends. Moreover, futures struggled to surpass established resistance levels.

“Since April 15, we’ve been below the 20-day moving average, with old highs around $110, $104.37, and $105.32 acting as resistance. The fund recently went long, reaching nearly 135,000 from around 36,000 on April 8, but Sloup suggests these support zones may continue to market weakness next week.

One cautionary note is that deferred contracts may experience support tied to emerging health issues.