Grains end mixed with wheat higher for the fifth consecutive day.
Is the rally in wheat just fund short covering or is the market really concerned about U.S. and global production issues?
Darin Newsom, Senior Market Analyst for Barchart, thinks the move has been purely technical. “If you look at the three keys on real fundamentals which is cash index, which is basis, which is futures spreads and they’re all incredibly bearish. They haven’t changed so I see this as a non-commercial play right now.”
That’s despite news headlines about weather issues in the Western Hard Red Winter wheat belt and globally. Plus, news stories are highlighting India’s shortfall of wheat and how that may make them an importer for the first time since 2017.
Soybeans end steady with corn lower, unable to follow wheat and taking a break after three up days. Both markets ran up into the upper end of their recent trading ranges and hit chart resistance.
So, is the rally over in those markets?
“It would not surprise me if funds cover some of their short position over the coming weeks because their short positions were substantial, but there’s really no fundamental reason to be get excited about this,” he says. In fact, he says soybean export business has been slowing down.
Newsom says the market is also seeing rain chances for the Midwest and some of the dry areas of the Corn Belt in the next few days and he sees that as bearish as it will be welcome.
Cattle see a corrective day on Wednesday after running into chart resistance and with more HPAI headlines.
Plus, there have been bigger setbacks in metals and the energy markets. So, are the inflation and geopolitical concerns over for the markets?
Newsom says it’s unlikely especially with the conflict in the Middle East continuing and with upcoming PCE inflation data being released at the end of the week.
