Grain and livestock futures ended sharply lower on Friday, May 29, as broad-based selling swept across agricultural markets. The downturn was attributed to fund liquidation and a general risk-off sentiment following developments in crude oil markets and geopolitical news.
Matt Bennett of AgMarket.Net said the selling was linked to falling crude oil prices and announcements from President Trump regarding the reopening of the Strait of Hormuz and a temporary ceasefire. “I mean, it’s certainly been an on again, off again deal. Anytime that we feel like it’s not going to open for a while, you know, you keep some of that risk premium in place. But the risk or war premium, if you will, certainly came out of the market here,” Bennett said.
End-of-month speculative activity also contributed to pressure on corn, soybean, and wheat contracts. Bennett said funds were liquidating long positions ahead of the weekend: “A lot of these funds had been long…corn, beans and wheat. And certainly they’ve been in liquidation especially as they got closer to the end of the month.” He added that Sunday night trading would be important to determine if recent peace agreements would hold.
Technical chart damage was noted for July corn after breaking key support levels. “July corn certainly doesn’t look good on the chart…If you look at December corn, that chart looks a lot better,” Bennett said. Wheat futures also saw declines with Kansas City wheat experiencing eight consecutive lower moves despite historically low crop ratings: “Obviously, that doesn’t make you feel good if you’re sitting there with a poor crop out in western Kansas…we continue to be reminded that the U.S. wheat crop is a small player in the world game.” Soybean futures remained within their trading range amid speculation about China reducing tariffs on U.S. imports.
Soybean oil provided some support due to strong biofuels demand and hearings regarding Treasury Department rules: “There’s no doubt that crush margins have been fantastic…As you continue to build this industry out…it puts us in a better spot because of domestic consumption,” Bennett stated.
Livestock markets followed grains lower with live cattle dropping due to profit-taking by funds as well as weaker cash trade figures: “$250 and above seems tough to maintain right now,” he said regarding cattle prices. Lean hogs reached six-month lows with little chance for recovery while cattle prices remain under pressure.
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