Grains end mixed Monday with livestock mostly higher.
Brian Grete, Pro Farmer, says wheat was supported by light fund short covering as traders were adding in some risk premium.
“The geopolitical front is kind of leading it at the moment from a price perspective and we’ll have to see. Those types of things are tricky because you never know how long they are going to last and how price influential they’ll be,” he adds.
He isn’t sure this is enough of a catalyst for the wheat market to take out last week’s highs but if those prices are breached he thinks there will be more technical buying interest.
The strength in wheat and crude oil both pulled up corn.
However, he thinks funds are about done taking profits as they have trimmed their short position substantially from the record high and don’t have a reason to go long in the grains.
Soybeans held chart support but were weighed on by the lower meal market, as Grete thinks it’s too early for the market to be trading South American weather and this week’s rain chances in Brazil.
He says the managed money traders are long over 100,000 contracts of meal and if they continue to exit that position it will keep pressure on soybeans.
“I think $320 is the price mark to watch is soybean meal for support from a technical standpoint for December meal,” he says.
Grains markets are likely seeing some positioning ahead of the WASDE and Grete says there is downside risk in the market since it has rallied so hard going into the report and with the trade expecting lower yields.
“The risk is if USDA actually were to increase yields in the report since most are expecting the agency will trim production due to the hot dry finish to the season,” he says.
Cattle futures closed mostly higher with stronger fed cash trade for a 4th week, but he thinks the futures may have a tough time taking out last week’s highs.
“Just from a cyclical standpoint I think we’re close to tops in that market,” he says.
However, he thinks there is still a chance down the road to take out the record highs.
Lean hog futures also reversed a lower start and made fresh for the move highs.
Grete says that market has been resilient and seen contraseasonal stength on fund buying and strong cutouts.
