Corn and wheat recovered nicely after the early pressure tied to China cancelling another 9.7 million bushels of Soft Red Winter wheat.
Mike Minor, Professional Ag Marketing, says wheat may have seen some short covering after the May Chicago wheat hit another new contract low, quickly pricing in the China news. However, he thinks China may cancel the balance of the wheat they have on the books, which is around 30 million bushels.
The rally in wheat helped to lift corn back higher and it closed above the 20-day moving average again for the 3rd straight session, another indicating of a bottom forming. Plus, export inspections totaled 44.2 million bushels and helped to support corn futures. The funds are still short nearly 297,000 contracts as of last Tuesdays CFTC Commitment of Traders Report and he thinks they are starting to cover those positions.
Soybeans had a higher week last week but ran into chart resistance during Monday’s session and saw profit taking and farmer selling after a nearly 48 cent rally off the recent contract lows. Plus, China’s Producer Price Index was down 2.7% marking the 17th consecutive lower month, which also added pressure.
Minor says the funds were record short 172,000 soybean contracts as of last Tuesday. But here too Minor says as May soybeans moved above the 20-day moving average some of those fund traders likely covered short positions and soybeans held above that chart area Monday despite a lower close.
Cattle futures saw follow through selling after last week’s chart reversal. However, Minor thinks the cattle are just consolidating and seeing some routine profit taking within a trading range, and are not necessarily breaking down.
Hogs consolidated but should be well supported by the rising cutout values. Minor says the deferred contracts are finally offering hog producers some decent margins that they should take advantage of.
