A risk on day in the markets resulted in higher closes in both grain and livestock futures.
For the grains this makes the second consecutive day of big gains.
The outside markets seemed to be trading calming fears about the Middle East conflict as gold and silver plunged, but the stock market rallies. That seemed to spill over into the ag markets.
Jim McCormick, AgMarket.Net, says wheat led the rally on short covering and the market was also adding weather premium on concerns about cold temperatures and dryness in Hard Red Winter areas of the U.S. He says conditions are deteriorating ahead of a possible rain event in the extended forecast.
There are also crop concerns in the Black Sea and Europe with dryness and cold temperatures hurting the wheat and driving up European wheat prices.
In addition, McCormick says India is pulling wheat out of their reserves, which are at a 16-year low, to fight higher food prices. He says they are not typically an importer but if they start to buy to build back reserves this could be a game changer for the market.
Corn and soybeans followed wheat but also bounced off chart support areas and saw some technical buying and fund short covering.
The funds were collectively short 612,000 contracts in the grain markets as of last Tuesday’s Commitment of Traders Report and so if the market continues to take out some resistance areas on the charts it could produce a more sustained rally.
