Grain and livestock futures all closed higher on Friday.
Garrett Toay with AgTraderTalk says grains were not only strong Friday but saw mostly higher weekly closes.
Technical Buying in the Grains
What drove the buying?
He says it was mostly technical, “The funds don’t want to be this short at these price levels and with so much of the growing season ahead,” he says.
Technically corn and soybeans had strong closes with December corn getting above the 50-day moving average, soybeans ended above many key moving averages.
However, Toay says both have been trading within their respective ranges for several weeks and continue to coil, so they will need a big catalyst to get through these technical areas on the charts.
Grains Adding Weather Premium?
But was the market adding weather premium, or should it be, based on the hot, dry extended weather forecasts?
Toay says the corn and soybean markets have little if any risk premium built into prices and he thinks the weather models are starting to confirm a hotter drier pattern similar to other years when corn yield was trimmed.
Ice Breaks With China Supporting Soybeans
He concedes soybeans reacted positively to news of President Xi and President’s Trumps constructive call that will result in the two-sides sitting at the table to negotiate.
Despite that, the markets are getting mixed demand signals, says Toay, and the market is running out of patience waiting for trade deals and looks tired.
There is enough trade uncertainty that end users and international buyers are only buying hand to mouth.
Cattle Make All-Time Highs
Cattle futures gapped higher on the open Friday and made all-time highs for a second day in both live and feeder cattle futures.
Cash developed at record levels on Thursday and then the market beat those marks on Friday.
Southern trade developed at $235 in Kansas and $242 to $244 in the North, which was $7 to $9 higher than last week.
Toay says its been an unbelievable run and may continue with tight supplies and strong demand and the futures still at a discount to the cash.
Hogs Make Contact Highs
Lean hog futures also ended higher with deferred contracts making contract highs.
Toay says hogs followed cattle but are also being pushed by higher cash and cutouts and strong demand as some consumers trade down for cheaper pork as a protein source.
