Grain and cattle markets saw red on Valentines Day with a huge rally in hogs.
Kent Beadle, Paradigm Futures, says the fund selloff in the grains was tied to positioning ahead of USDA’s Ag Outlook Forum which starts on Thursday. He says the market is anticipating higher ending stocks for corn, soybeans and wheat from the agency.
Funds stepped on the accelerator as a result and pushed corn to new contract lows. Beadle says the next area of chart support for March is a long-term low around $4.20.
Soybeans also made new lows for the move and Beadle says took out a major chart support area in the process. “The $11.79 area was the low from last week and a good area of support, but the market took it out in the overnight session then bounced early in the day only to close below that level with the late day selloff,” he says. The lack of threatening weather in South America is also a contributing factor to the weakness.
Wheat futures scored new contract lows in Kansas City and Minneapolis wheat futures on speculative selling but also Black Sea export news. Beadle says a news wire story suggests that Ukraine has around 50 million metric tons of corn, wheat and oilseeds that they are looking to export which would compete with the U.S.
Live and feeder cattle futures were lower to start the day on continued corrective selling and profit taking. However, Beadle says the pressure accelerated with cash trade breaking in the South at $180 live, which was $2 lower than last week and a disappointment to the trade.
Lean hogs bucked the trend and staged a big rally in the deferred contract as February went into expiration. Beadle says it was tied to testimony U.S. Ag Secretary Tom Vilsack made to the House Ag Committee in which he asked for Congressional action on California’s Prop 12. Vilsack suggesting that the meat industry will see “chaos” if Congress doesn’t step in with a nationwide ban.
