Grains ended higher on Wednesday, with cattle and hogs lower.
Grains See Santa Claus Rally
Grain markets were all higher the day before Christmas. Mike Minor with Professional Ag Marketing says the grains saw a Santa Claus rally on technical buying as under light volume its easier to move a market. However, after a $1.20 break in soybean futures from the highs on Nov. 18 the market was oversold and due for a technical bounce. He says the soybeans classic “buy the rumor sell the fact” break was overdone.
Corn Closes Above $4.50
Corn futures closed above $4.50 psychological resistance on the March contract which was bullish according to Minor. The market generally sees a pick up in farmer selling at these levels so he was encouraged by the action.
Wheat Sees Short Covering and War Premium
Wheat futures were up for a third day and Minor attributes the rally to fund short covering as well as the market adding some risk premium. The Black Sea war continues to escalate and some grain infrastructure has been damaged in Ukraine which could impact grain and export flow from the region. So, traders are adding some premium to the market.
Will the Rally Continue Friday?
Often when grain markets rally the day before Christmas that trend continues the day after the holiday. Minor is optimistic that with light volume the grain market could extend the rally and give the bulls Christmas.
Cattle Futures End Mixed
Live cattle futures ended lower for a second day after running into chart resistance with feeders lower except for the January spot month contract. Minor says pressure was also tied to a $7 drop in Choice beef cutout values on Tuesday’s close and lower boxed beef values again at noon on Wednesday. “The holiday beef buying has been disappointing. So, maybe this is an indication consumer demand is finally slowing?” he says. Despite that fed cash trade developed Wednesday in Western Neb. at $229 to $230 live which is steady to $1 higher than last week’s weighted average. Dressed prices were mostly $356 to $357 this week, steady to $1 lower. Southern trade was mostly $229.
Lean Hogs Fade With Bearish Hogs and Pigs Report
Lean hog futures gapped lower on the open Wednesday in response to the bearish USDA Quarterly Hogs and Pigs Report which showed inventory at 100.6%, which was above the 99% trade guess. Other categories included kept for breeding at 99.1%, which was close to guesses and the kept for market category was at 100.8%, above the average estimate of 99.1%. However, Minor says the futures handled the news well ending off of session lows.
