Livestock ended lower on Monday with macroeconomic and demand concerns tied to the risk off day in global financial markets, including Japan’s Nikkei.
However, after a lower start corn and soybeans held chart support and rallied.
Chuck Shelby, Risk Management Commodities, says speculative traders are near to record short in the grain complex and were forced to unwind some of those positions and took profits when the stock market fell and they faced margin calls.
The sell off in the U.S. dollar was also helpful, especially for the wheat market, making U.S. exports more competitive.
As a result he isn’t sure the rally in the row crops is sustainable but says it will depend on what the stock market does from here.
Livestock futures were lower as funds are long in those markets, especially cattle, and they also liquidated some of that position.
Speculative traders were concerned about broader recession and the impact that could have on meat demand.
However, Shelby says the effect on demand is yet to be determined as the beef markets is heading into one of its seasonally strong times around Labor Day.
He is hopeful once the panic selling fades that cooler heads will prevail and the market will go back to trading the strong fundamentals in cattle.
