2 Minute Drill: Corn and Cattle
Grain futures were mostly higher in today’s trade, July corn was the straggler that just couldn’t get the job done, settling 1 ½ cents lower to 592 ½. Technical selling after failing against our resistance pocket from 606-608 may have been the catalyst. 586-588 is the pivot pocket that the Bull want to defend into the weekend, a failure to do so could trigger additional weakness and take prices back to support from 569-572.
December futures managed to post some solid gains, up 8 ¼ at the close to 530. An inverse head and shoulders pattern is still on the table, but the Bulls want to see a breakout above 536-540 to spark another leg up.
Soybeans were the big winner in today’s trade, both old crop and new crop. July soybeans finished the day 29 ¾ cents higher to 1329 ½. This chart looks like an absolute yo-yo with big swings up and down. Conviction on the next direction is low at the moment. The new crop November contract settled 22 ½ cents higher to 1169.
Wheat futures were also able to gain ground with July Chicago futures settling 16 ½ cents higher to 610 ¾, about 6 cents away from unchanged for the week. July KC wheat was 12 cents higher to settle back above the psychologically significant $8.00 level, 802 ½. July spring wheat was 9 cents higher to 789.
Today’s move higher in live cattle futures prices is what some old timers would refer to as “a rip your face off rally”. June live cattle settled the day 5.77 higher to 174.90. June options go off the board at tomorrow’s close and first notice day is next week. August futures prices were 4.70 higher. A screaming hot cash market coupled with a squeeze led to the high velocity move. It took CVOL to the highest levels of the year too. CVOL is a measure of volatility, CME has these for each market. Last time we were near these live cattle CVOL levels was April 11th, following an $11 rally. The market traded higher for a day or two then consolidated and pulled back some. Today's trade was a lot different than what we saw in April though. The rise in CVOL indicates uncertainty and panic, making options more expensive. In fact, during today’s move we saw some put options gaining value as the market went up. This is not normal market function.
Keep in mind that cattle had higher limits coming into today, with the same limits intact until further notice. 6.75 for live cattle and 8.25 for feeder cattle.
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