Grains end higher to start the week, cattle mixed, hogs lower.
Brian Grete, Pro Farmer editor, says wheat led the price rally in wheat once again adding weather premium on global production concerns. The market has focused on the drought and frost in areas of the Black Sea and most notably Russia.
But how much higher does the wheat market need to go to price in these weather concerns in?
The rally is also a result of short covering. The funds were short in the wheat market and so they have been liquidating. Whether or not they continue that trend or go long in the market is dependent on the weather as Grete says bull markets need to continually be fed.
Corn and soybeans have been following wheat according to Grete, but the funds have been liquidating short positions in those two markets as well. In fact, on the last CFTC Commitment of Traders report the funds had exited over 100,000 contracts each in the corn and soybean markets, which is a record for any week.
Grete says the key will be whether or not the funds go flat and then decide to establish a net long position in the grain markets. “I am not sure at this time if there is a big enough weather problem to keep the bulls fed to do that,” he says.
Some production concerns have also at times been a focus in the row crops including the flooding in Southern Brazil which has trimmed the soybean crop there and some private estimates have reflected that. However, Grete is not expecting Conab will recognize that in their latest report on Tuesday. “It might be too early for that,” he says.
Live cattle futures ended mostly lower on Monday despite a higher start and the futures discount to the cash trade which is supportive. Feeder cattle ended slightly higher.
Hogs continued to consolidate as a result of the futures premium to the Lean Hog Index.
