Corn and soybeans are lower to start as those markets continue to see fund selling on every rally. Darin Newsom, Barchart, “This is all a fund play at this point.” Despite that, he says many of the grain and oilseed contracts are in position for bullish reversals on their weekly charts if we can close higher this week. “And what that would tell us is funds selling could be starting to slow and some of those shorts are starting to get covered, but we’re not seeing signs of it yet.”
Newsom is looking more at the signs from spreads and basis levels. “In corn the March May spread is neutral, basis is neutral to bearish and then if you go out to the May July its actually starting to look a little bit bullish. Which is interesting to me because we’re showing some demand down the road.”
Soybeans are different he says, “We’ve got both March/May and May/July futures spreads still leaning towards the bullish side, but basis is neutral at best and weakening taking its cue from what’s going on in Brazil with new supplies making their way to port.” So, he says the U.S. will see even less demand for soybeans because the window has closed for exporting with Brazil’s crop less expensive.
Wheat is higher despite a sharp rally in the U.S. dollar. The pop in wheat he attributes to fund or non-commercial short covering. “I think that is all technical and it goes against everything I believe about spreads and fundamentals.”
Newsom says outside markets are responding to the Non-Farm Payroll (NFP) data which was above expectations with 353,000 jobs added in January. “I think that’s why the dollar is higher and crude oil is lower this morning.”
Cattle try to extend gains pushed by higher cash and the shrinking herd confirmation from USDA this week. Texas cash trade was mostly $178, up $3, Kansas business was marked at $178-$179, $4-$5 higher. Northern dressed deals were at $280, $3 higher.
