Grain and livestock futures all end lower again Wednesday with commodity wide fund selling.
Hogs make new lows for the move again. Jeff Hoogendoorn, Professional Ag Marketing, says the cash and cutouts have been stagnant and so has the Lean Hog Index which is trading around $92. So, the futures market has continued to take all the premium out of the market to trade down to the index.
He says the futures had built in a great deal of optimism about the cash early in the year, but demand has not been as strong domestically as expected which is weighing on both cash and cutouts.
“The entire market move on the futures side was optimism in anticipation of huge rally in both cutouts and cash markets back there in April. Today we took all of that premium out,” he says.
“The Mexican peso has also strengthened against the U.S. dollar and that is also a bearish factor,” he says as Mexico was the top export customer for the U.S. in 2023.
Hoogendoorn says the futures made new contract highs and peaked around April 10 and have steadily lost $16 to $18 since then as funds have been liquidating their once record long positions.
He thinks technically there is support around $90 in the June and July contracts, so he thinks the slide is about over. “Plus, the futures are setting right on the index and so we’ve done enough damage there,” he says.
The lower hog market pulled down cattle futures in addition to the lower boxed beef cutouts at noon. Plus, funds were also selling and took out some key support areas on the charts.
Funds are also back selling and pushing the short side of the grain markets.
Corn and soybeans tried to bounce early in the day as they are oversold technically, but the lower wheat futures eventually pulled down the row crops.
Wheat continues to see profit taking after a nearly $2 rally during the month of May.
Hoogendoorn says the market also seems to be comfortable with the corn and soybean crop ratings and planting progress, especially with the rain recharging the soil in many of the dry areas of the Corn Belt.
