Grains Rebound on Fund/Money Flow: Cattle Washout on Lower Cash

Dave Chatterton, Strategic Farm Marketing, says grain markets rebounded late session led by wheat.

Grain and hog markets end higher on Thursday, while cattle plunge.

Dave Chatterton, Strategic Farm Marketing, says grain markets rebounded late session led by wheat.

News was light in the grain markets allowing money flow to dominate the trade and created a roller coaster during the session.

A higher dollar initially limited the grains, but fund short covering finally helped push the wheat market higher.

Funds are short 90,000 contracts in Chicago wheat but short covering was sparked in all three classes as they have move above their 100 day moving averages.

“So the grain market looked like it rallied on money flow. The funds are extremely short in wheat and long in corn and soybeans and so they did some reallocation,” he explains.

Soybeans and corn saw early strength and corn was helped by strong exports at 58.2 million bu, while soybeans were weak at 14.2.

However, both markets failed at chart resistance and saw selling, then checked out support and bounced off those levels.

Funds are long in corn but the March contract is struggling to close above the $5 mark which is needed to keep the funds defending their position.

Hogs also ended higher on strong exports and the rising lean hog index.

However, cattle futures saw a washout with a new strain of bird flu and following lower cash and cutouts.

Cash trade developed at $206 live in the South, down $2 from last week’s weighted average while Northern dressed trade was at $328, down $1.

Boxed beef cutout values plunged on Wednesday and Choice cutouts were down again at noon which added to the weakness.

Chatterton says cattle have been down five of the last seven sessions and did technical damage on Thursday with April closing below $200.

So, he says there may be a bigger correction in the works.

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