Grains continue to march higher with weather concerns in the U.S. and South America and the lower dollar.
Darin Newsom, Senior Market Analysts with Barchart, says there have been heavy rains and flooding in southern Brazil that are slowing the last of the harvest there and even in Argentina. So that is providing support to especially the soybean meal market.
The Buenos Aires Grain Exchange also lowered Argentina corn production yesterday by 3 million metric tons to 46.5 mmt, while central Brazil is hot and dry which is stressing the second crop corn and that is also bullish.
Newsom says funds are also covering their short positions in many of the grain markets with the strong technical action.
He says July corn finally broke out of its sideways trading range, taking out recent highs and making new highs for the move. Newsom says that could trigger more fund short covering if the market can close above these areas.
The wheat market has already seen chart breakouts, as well as soybean meal.
Newsom says he is watching July soybeans for a breakout above the $12.40 the high hit on March 29 when USDA released its Prospective Plantings and Quarterly Stocks Report. A close above those areas is key to keeping technical momentum going higher and funds taking profits on short positions.
He says the bigger question is will the funds eventually buy grains and go long in the market? He says it’s too early to tell if the rally can be sustained. However, seasonally the grain markets have a tendency to move higher in this time frame.
Crude oil continues to see pressure. Newsom says that is counter seasonal and is a result of higher U.S. inventory.
Meanwhile, the dollar has pulled back reacting to the Jobs report which showed higher unemployment and fewer jobs added last month.
