Grain and livestock close mostly higher Friday.
Chip Nellinger, Blue Reef Agri-Marketing says soybeans recovered off Thursday’s new contract lows on fund short covering and profit taking.
Additionally, market talk had Sinograin in buying 500,000 MT of U.S. soybeans this week for March-April delivery for their reserves and he says that was also supportive.
The recovery in the Brazilian Real off of historic lows to the U.S. dollar also spurred some recovery in the market.
However, he doesn’t trust it.
“I think we could still go back and make new lows with the record South American crop on the way,” he explains.
Corn followed soybeans but are also trading on their own demand strength.
However, corn has been unable to take out chart resistance just above $4.50 where the 200 day moving average sets.
Nellinger says the market will eventually take out that area as corn closed higher for the week and posted a six month high weekly close on Friday.
“We’ve trade higher than that in corn but not closed at that level. That is the kind of technical action that will keep the funds interested in pushing long in the corn market,” he says.
Wheat futures scored contract lows in Chicago and Minneapolis on Thursday and tried to recover on Friday.
The weakness according to Nellinger has coincided with the strength in the dollar index and that has been a reaction to the Fed speak regarding less interest rate cuts in 2025 than expected.
Cattle futures closed back higher on Friday but had a lower weekly close.
This came in the face of steady to $2 higher cash trade.
So does that divergence indicate a top is in and will it spook the funds to take profits on their long position in cattle?
Nellinger says the funds could take some money off the table in both cattle and hogs as it is end of the year.
However, he cautions that with light holiday volume the market moves can become more exaggerated.
