Grains and cattle end higher on Thursday, with hogs lower.
Darin Newsom, Barchart, Inc. says grains were higher, with soybeans leading, despite the bearish Chinese trade news.
China denied any ongoing negotiations with the U.S. and says they need tariffs dropped to zero.
Meanwhile, President Trump and other officials walked back Wednesday’s comments about lowering tariffs on China.
Reports that Japan is weighing buying more U.S. beans as part of a tariff deal appeared to be part of the catalyst but the Newsom says the rally in soybean oil also drove buying interest on strong exports.
Soybeans scored a chart breakout with nearby contracts closing above resistance and opening the door to additional fund buying.
The July soybean contract closed above the 200-day moving average after the May contract was able to eke out a close above that resistance area on Wednesday.
What is driving the speculative buying?
Newsom says its likely someone in the trade knows something or anticipates some positive news like the announcement of trade deals.
Corn futures finally bounced after four down days with spillover from soybeans and strong weekly exports at 45.4 million bu.
The forward spreads were evident, but Newsom isn’t linking that to underlying demand or commercial buying because Friday is option expiration on May contracts which influences that action.
Wheat futures saw a bounce off new contract lows in the hard red winter wheat class but Newsom says it was just short covering as funds are still short in all three classes.
Plus, there have been continued chances of rain in the forecast in HRW country.
Cattle futures ended mostly higher along with the continued correction in the S&P.
After making new contract highs in live cattle on Wednesday only the April contract was able to push back above those levels still aligning with the cash.
However, Newsom says with the strong fundamentals he’s not reading much into the technical failure, especially if cash trade is strong again this week.
The stock indexes saw another higher day Thursday still correcting off of Monday’s collapse.
Newsom isn’t sure if this is just a correction moving into the end of the month after the markets moved into bear territory.
However, he points to investors like Warren Buffett buying short term T-notes as a safe haven and an indication that there is still uncertainty ahead for the broader markets.
As a result, Newsom doesn’t see the funds extending their length in corn and soybeans much more unless there is a weather problem.
