Grain and livestock futures end mostly lower Tuesday with a poor performance to end April.
Soybeans saw the biggest losses on fund selling and Kent Beadle with Paradigm Futures says it was driven by heavy deliveries against the May soybean oil of 2,101 contracts and May soybeans at 533.
He says, “That’s a large number and it was definitely construed bearishly by traders. It was maybe more of a surprise we had that large of deliveries in soybeans with the fairly large carry we see. It didn’t make sense to deliver rather than just roll into a deferred contract.”
Grains also saw end of month profit taking and wheat was the most susceptible with the recent run up in prices.
Chicago wheat also had heavy deliveries against the May of 1,151 contracts and that tied to forecasts showing some rain chances for some of the dry areas of Russia led to fund selling.
The fast-planting pace also weighed on grains.
Beadle says, “Monday afternoon we had much faster planting progress than some people in the trade were looking for. Corn planting was 5% ahead of the five-year average, soybeans were 8% faster and spring wheat planting progress beat the average by 15%. In the Western Corn Belt particularly farmers were very active until about last Friday when the rains started to come. However, they saw the forecasted rains and worked hard to try to beat the weather system,”
With continued rain in the forecast the rest of this week and next, Beadle says the big question for the marketplace is whether or not the average is going to come in line with the pace. “The USDA uses May 15 as the cutoff for their crop modeling, so that’s when it becomes important,” he says.
Plus, outside markets were risk off with the stock market lower and the dollar higher which weighed on the grains but also the livestock futures.
Beadle says the heavy fund liquidation for a second day in cattle was also a result of end of the month positioning.
There was also risk aversion tied to USDA announcing it will be testing ground beef in the states impacted by H5N1 and another case detected in a herd in Colorado.
“If USDA starts to find H5N1 in ground beef the impact on demand could be significant,” he adds.
Hogs ended mostly lower with the futures premium to a softening lean hog index curbing upside.
