Grain and cattle futures end lower on Monday, with hogs higher.
Vince Boddicker, Farmers Trading Company, says grain and cattle markets saw risk off selling Monday in tandem with outside markets.
The stock market and crude oil were sharply lower and that created risk aversion in the broader market place.
Recessionary concerns linger as President Trump has recently called for rate cuts amid Fed Chair Jerome Powell’s firm stance.
This has traders uneasy about the Fed’s credibility and independence.
Traders are pricing in at least three interest rate cuts in the U.S. this year, New York Fed President Bill Dudley recently indicated that policymakers will likely move slower than anticipated as current trade policies are stirring inflationary conditions.
Grain markets arguably have also had a difficult time getting above technical resistance at last week’s highs and so that was also a factor.
Wheat futures were weighed on by rain chances in the hard red wheat areas of the Southern Plains and even Northern Plains hard red spring wheat country.
Boddicker says an upgrade in Russia’s wheat production estimate also cast a negative light on the wheat futures.
The grains largely ignored the sharply lower U.S. dollar index which is generally commodity friendly.
Boddicker says overall the managed money traders are looking at grains as a value buy especially if the stock market continues to see pressure and tariffs end up causing inflation to rise.
Cattle futures started higher pushed by the sharply higher cash trade.
However, the collapse in the S&P spilled over to overwhelm the market.
Lean hog futures were the only commodity in the ag space that ended higher as pork is seen as a more recession proof meat and cash and cutout values were higher to end the week.
The funds have also been back in buying but futures are starting to run into chart resistance as well.
