Grain futures took another shot yesterday following another bearish USDA report as funds put the peddle to the metal. Friday’s Commitment of Traders report showed that funds hit another record net short position in the grain & oil-seed complex, 700,460 futures/options contracts fort the week ending May 7th. On top of the bearish report, the U.S. and China failed to reach an 11th hour trade deal to avoid the increase in tariffs. The big concern for us going into the weekend was the possibility of retaliatory tariffs over the weekend, as of writing this there have not been any. There have been talks of another aide package this year if the numbers warrant it. With a growing carryout we feel that the money would be better spent in prevent plant. Aside from trade talks, attention will also be on weather. Crop Progress will be released after the close on Monday, recent weather should keep progress far behind the 5-year average. Be sure to check out our full Grain Express tomorrow morning for the full technical breakdown.
Cattle futures managed to rally in the back half of the week’s trade, but it was just shy of a positive weekly close which would have been the first in three weeks. In last week’s interviews and daily commentary, we talked about the similarities between this year’s sell-off and last year’s (early April). They both had a similar break in terms of price and percentage, the RSI was just 4 points more oversold this year, the number of sessions the sell-off lasted for this year and last year was 14. Is the bottom in? That is too early to say for sure, but at the very least we are expecting to see some relief in the near term.
Lean hog futures were as choppy as they’ve ever been, presenting opportunities for short term trades in the bull and bear camps, only to finish the week right where we opened. We continue to believe the market has room to work to the upside over time, we are looking out to deferred contracts. The ace in the hole for the bull camp is the possibility of ASF spreading to the U.S.
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