Grains end higher on Friday with livestock lower.
The pop in grains was mostly due to short covering as the markets were oversold after removing weather premium all week and some traders were taking profits on grains to pay for their margin calls in the plunging stock market.
DuWayne Bosse with Bolt Marketing says, “I’m afraid 100% of it was profit taking from an ugly week we had. You know we sold off really hard. It’s nice to see the pop but sadly I think this was all short covering and kind of a dead cat bounce off the lows.”
So, he thinks it will be tough to build on it starting a new week with growing yield projections and lack of a serious weather threat, in addition to farmer selling of old crop on any rallies.
“I’d love to tell you I have bullish reasons for this market to trend higher from here but I really don’t. What changed for me this week was the weather. Last week the extended forecast was hot and dry and I thought we would be sharply higher Sunday night allowing for some hedging opportunities and the exact opposite happened. The weather changed and we had rains in Iowa and Illinois,” he explains.
Soybeans did see 7.4 million bushels of new crop export business to China which was lightly supportive.
Meanwhile, wheat got a boost from short covering and a sharply lower dollar and managed to end with a higher weekly close.
However, Bosse is not ready to call a low in the wheat market with the impending spring wheat harvest.
Livestock futures set back with the collapse in the stock market and some long fund liquidation in the cattle.
“I feel like the highs are in in cattle,” he explains.
He says feeders did chart damage, while October live cattle at least came back to close above the 100 day moving average.
Lean hog futures fell in sympathy with the cattle.
