A mixed close in both grain and livestock futures. John Payne, Hedge Point Global Markets, says there was positioning end of month and quarter, plus heading into USDA’s Prospective Planting and Quarterly Stocks reports on Thursday.
Soybeans did end 11 to 17 cents higher following the rally in soybean oil and palm oil. Payne says, “In the last week we’ve seen the edible oil markets across the globe rally. Palm oil, canola oil and then the rapeseed in Europe, all of them have bet on the come and I think that’s good for soybeans and soybean oil in general.”
Soybeans and products also saw end of month and quarter short covering with the funds heavily short in all three legs of the soybean complex and taking some profits. Payne also believes there is some short hedge lifting by farmers in Brazil who are selling their crop as harvest progresses to around 70%.
Payne says there are some reasons to be bullish soybeans, but he thinks the market will need help from USDA’s report both on the acreage and the stocks.
Corn tried to follow soybeans but failed at chart resistance again around the 50-day moving average and the market is trading range bound waiting for the USDA report data. Payne says the big wild card for the corn market isn’t South America, but Ukraine. “That’s where that excess supply is coming from now, not Brazil like it was last year. Ukraine has ironed out some of its supply issues moving product through western Europe,” he says.
Wheat ended mixed to slightly higher in Chicago futures. Wheat futures posted higher weekly closes in all three classes last week and have been building some premium on bullish news out of Russia with their prices rising and with Matif wheat prices firming up. “Russian wheat is no longer the cheapest in the world. U.S. wheat is falling below their prices,” he says.
Cotton futures ended higher Monday but are awaiting the acreage figures and Payne thinks the market is anticipating higher acreage as a result of lower corn prices. “I think you’ll see close to an 11.5 to 12 million acre cotton crop which takes us above the 2.0 to 2.5 million bale carryover which has been supportive for the history of the trade,” he says.
Live can feeder cattle futures set back with the bearish Cattle on Feed placements number. However, Payne thinks it’s a short-term correction because of the bullish fundamentals, including record cash trade in cattle feeding areas in both the North and South.
Hogs bounced on spread unwinding and higher cutouts but also squaring ahead of the Quarterly Hogs and Pigs Report Thursday afternoon.
