Pre-Report Rally or $US Bump?

June 9th, 2009 Posted in Uncategorized

In the grain and oilseed markets today we experienced some pretty good rallies. Spring and Winter wheat rallied between all three exchanges, as did Corn, Oats, Rice, Soybeans and soy products.

While there may be an argument that wheat popped on short-covering ahead of tomorrow morning's report, I more so think the big break in the $US was the predominant influence today. As I write, the DXU9 is down 188 points on the day  - a pretty good move to the downside. I published the expectations for the USDA numbers due out tomorrow morning, please refer to those when the report comes out.

Cattle & Feeder Cattle had a decent day today. It is encouraging to see the live cattle futures hold at recent trading-range lows. Subject to any negative influence a bullish grain report may have tomorrow, it sure feels like cash cattle has a shot now of trading at even-money with last week at $82 in the South.

Lean Hog futures were mixed. Auggie and Dec. ended lower on the day, July and Oct. ended better. The near-term/deferred spread has widened quite a bit. Indicative, the LHN9/LHZ9 spread topped off at 4.20 the other day.  The breakout to the upside on this spread has been parabolic. It's ripe for a correction. I will not look to sell a high by picking a top, but I will be looking to buy the first decent pullback. In my opinion it looks like there's good support around -70 to -95.

Bob