Grains and live cattle close higher again Wednesday, with feeder cattle and hogs lower.
Mark Schultz, Northstar Commodity, says the rally in wheat has been driven by money flow.
All three wheat classes made new contract lows last week with hard red winter hitting hit five year lows and with the funds near to record short they are now exiting those positions and taking profits.
“With wheat prices near $5 traders said who wants to be short this market down here? I think wheat just got pushed down too low,” he says.
Another catalyst has been weather with global issues emerging including extreme heat and dry conditions in northeast China.
Wheat has had a $45 to $.50 rally off the lows and may run into chart resistance in both HRW and SRW futures around $5.70 according to Schultz.
Corn is following wheat higher but has also seen short covering by the managed money traders as technically the market has breached some resistance areas.
“The next objective will be to get July corn over the $4.70 mark, but December corn has already moved above it’s 200-day moving average,” he says.
That may also indicate new crop corn is adding some weather premium due to the fear of not getting all of the intended acres planted as some states are lagging due to excessive moisture.
Soybeans saw spillover from higher corn and soybeans but caught a bid with the soybean oil and meal market moving higher.
Here again, Schultz says soybeans need to close above the $10.70 mark to sustain that rally.
Live cattle were up for a 4th day, still seeing corrective buying after the recent key reversals.
However, the market was also pulled up by higher Northern cash trade at $230 live and mostly $360 dressed, up $2 with a range of $358 to $370. The South saw just a few in KS at $224 to $227.
Feeder cattle futures fell in response to the higher corn market.
While lean hogs were also lower as the futures are well above the cash index and are waiting for the market to catch up.
“The deep deferred contracts just hit contract highs and may be seeing some profit taking and hedge pressure,” he adds.
