Grains closed mixed Friday with a short covering pop in soybeans and meal, while corn and wheat hit fresh lows. Cattle rallied to hit near-term highs, with lean hogs firm.
Rich Nelson with Allendale, Inc. says the rally in soybeans was a result of funds covering some of their short position and taking profits heading into a three-day holiday weekend. Unfortunately, it was likely a one-day pop he says. “I hate to say so. We understand even some of my downside price targets have been met and could move into that sideways pause period so to speak, that’s our general economic view. Certainly, the short-term trade view is that a downtrend is still in place.”
March corn hit another new contract low on fund selling and following the lower wheat market. despite funds holding one of the biggest short positions in corn ever. Plus, the market was still digesting the USDA Ag Outlook data as well. Nelson thinks the corn market is getting close to working in the most bearish news as open interest has been declining since February 5. “So, in other words this last leg of lower prices is now people getting out. So, whether its profit taking from bears or weak bulls finally getting out.” So, he says maybe next week the market might see a pause.
Wheat once again saw contract lows in March Kansas City and Minneapolis wheat on Friday and Chicago came within a half cent of the contract low as well. Nelson says the continued pressure from poor demand for U.S. wheat and competition from Black Sea wheat, especially Russia, is weighing on futures.
Live and feeder cattle futures both hit new highs for the move on Friday and posted higher weekly closes, which was especially encouraging with this week’s lower fed cash cattle trade. Nelson thinks the rally can continue, especially on the feeders with the strong cash prices at sale barns across cattle country. “This week’s sale barn action, feeder prices up 37% over last year, calf prices up 41%.”
Lean hog futures ended firmer on Friday after a rally earlier in the week tied to talk of legislation to ban Prop 12 and strong exports. The futures posted higher weekly closes. However, Nelson says the April contract ran into chart resistance on Thursday at just below $86.00 and consolidated under that level on Friday.
