Grains are mixed early with livestock firming after a mixed start in cattle.
Darin Newsom, Senior Market Analyst with Barchart, says wheat is higher for a third day seeing mostly short covering as the funds had expanded their short position in all three wheat classes last week and is overshadowing improved crop ratings for winter wheat.
Although the catalyst may be the tensions escalating in the Black Sea and threats by Russia to use nuclear weapons.
Other markets like gold have added war premium as tensions rise between Ukraine and Russia, while the stock market is under pressure early.
However, Newsom says unless it turns into a full fledged war, he doesn’t think the Black Sea tensions change the global supply and demand picture for the wheat market which are still bearish.
“With all that’s going on over in the Black Sea. We haven’t seen a fundamental shift in these markets yet. Basis is still running neutral to weak pretty much across the board. We’ve got future spreads neutral, also neutral to bearish again, pretty much across the board. So, you know, this doesn’t look to be a big fear of, oh, no, the world’s going to run out of wheat,” he explains.
Soybeans are lower with no South America weather threat and tariff fears still in the back of traders minds.
Export demand has been picking up recently for soybeans and is slightly ahead of last year but he thinks its front loading by China who is concerned about a trade war.
Corn is trying to follow wheat with slight gains, but is being held back by the lower soybean market and is only a few cents below chart resistance.
Yet, Newsom says demand for corn has been strong reflected by firmer cash basis and bull spreading so he’s hopeful December can finally move above $4.35 resistance.
However, he’s concerned about export demand shutting off for all grains after Trump takes office in January and the fate of the biofuels industry under a new EPA head.
Cattle futures started mixed but have moved higher with feeders continuing to lead and despite seasonal weakness in fed cash and boxed beef.
