Grain and livestock all end higher to start the week.
Ted Seifried, Zaner Ag Hedge, says wheat led the rally in the grains initially with technical buying off the oversold bounce on Friday, a weaker dollar and adding geopolitical conflict or risk premium.
However, that spilled over to support corn and soybeans and they reversed lower openings as well.
Seifried says, “Over the weekend we hear that the Biden Administration is giving Ukraine the green light to use U.S. provided long range missiles within Russia and the response from Russia was not very friendly.”
He says this is bringing back concerns about the conflict between Russia and Ukraine which drove buying and short covering in the wheat and crude oil markets and that spilled over to prompt buying in the rest of the grain complex.
December corn closed back over $4.25 and January soybeans above $10.
However, Seifried is concerned there won’t be follow through buying because just before the market closed there was a news story released about a trade agreement between China and Brazil that will be announced on Wednesday.
“We knew this was a possibility because we knew President Xi was going to Brazil for I think 10 day. It really has the feeling of a high level visit like when Chinese delegations visited the U.S. for big signing ceremonies in the past,” he explains.
He is expecting some big purchase agreements of corn and soybeans to accompany that deal and some of it is a political statement aimed at President Trump’s threats of increased tariffs on China.
Cattle futures extended gains with funds defending their long position he says on a strong economic outlook.
“We had a better close on Monday with December live cattle closing above the 100 day moving average,” he says cautiously.
However, feeders have been much stronger than their live counterparts,up $7 in two trading days, and he thinks live cattle need to catch up.
He says the funds are long but may be reluctant to push the market ahead of the Cattle on Feed and with the cash market continuing to slip.
Lean hog futures also saw a technical bounce after a lower week last week.
Funds are record long in the hogs but Seifried says he needs to see some follow through buying on Tuesday to confirm that the market has not put in a top.
