Grain and livestock markets end mostly higher on Monday after seeing commodity wide selling pressure Friday.
What caused the recovery rally?
Naomi Blohm of Total Farm Marketing says corn, soybeans and soybean meal saw fund buying and weather premium being added early in the session with hot and dry weather forecasts for 15 days out in Argentina and Southern Brazil.
Early strength in all the grains was also tied to a set back in the U.S. dollar which reacted to a media report that President Trump was considering more targeted tariffs instead of across the board taxes on imports.
However, Blohm says Trump took to social media to refute the story causing the dollar to come off its lows and gains to be trimmed in grains.
However, corn and soybeans also traded inside days unable to take out chart resistance.
So, what will it take to get through these technical areas?
Blohm says it will take a bigger weather issue in Argentina and even then it isn’t likely until after the USDA’s data dump on Friday.
She thinks it will take a drop in corn ending stocks below 1.6 billion bu. to move the market above recent chart resistance as some of the improved demand the market has been seeing on ethanol and exports is priced in.
However, she expects higher demand projections on corn from USDA and smaller ending stocks, but is not as confident on soybeans.
The market will also be watching for South American production estimates for corn and soybeans as well as global stocks on wheat which are tight.
Cattle futures made new highs for the move and even contract highs in some contracts on the heels of record cash.
Did the action negate the hook reversal from Friday and are the fundamentals bullish enough to continue to push the market higher?
Blohm says it all depends on the cash market.
Demand has been strong and so if it can keep grinding higher the futures should follow.
