After sitting comatose for much of the session, grain contracts came under renewed pressure as the USD Index erased its losses. A lack of buying enthusiasm following an initial rally set the stage for the late selloff.

Live Cattle futures posted sharp losses late in the session Tuesday with nearby contracts at or near limit lower trade due to widespread liquidation in the Cattle complex. Lean Hog futures faded in late-day trade despite firming fundamentals.

Wheat futures closed mostly 2 to 5 cents lower in Chicago and Kansas City. Minneapolis Wheat finished mostly 5 to 8 cents lower. Futures at all three exchanges closed in the lower end of Tuesday’s range, but off session lows. Futures were unable to hold the mostly firmer tone that was established overnight. Support from outside markets gradually faded and the Corn market was under pressure for much of the day.

Corn futures were choppy throughout the day and ended narrowly mixed, which was mid-range on the day. Periods of price support came on ideas the cash market has absorbed early harvested supplies, returning the focus to the overall tightness of this year’s crop. Given the forecast for dry conditions across the bulk of the Corn Belt this week, harvest should easily cross the halfway mark this week.

Soybean futures settled mid-range with gains of 1 1/2 to 5 3/4 cents in the November through Sept 2013 contracts; far-deferred months were narrowly mixed. Soymeal closed slightly higher while Soyoil ended with moderate losses amid spreading activity and pressure from the crude oil market. Futures benefited from corrective short-covering today on ideas the downside has been overdone recently, especially considering the tight supply situation.

Lean Hog futures settled low-range in most contracts with losses ranging from 20 to 85 cents. Traders took advantage of recent gains by booking profits. The USD’s late move into positive territory, the discount the cash Hog index holds to futures and spillover pressure from cattle was also encouraging of this.
Live Cattle futures fell sharply into the close to do near-term technical chart damage. Futures closed $2.25 to $2.60 lower through the Oct 2013 contract, with far-deferred futures down 55 cents to $1.30. Funds lightened their long exposure to the market today, which triggered sell stops to sharply extend losses. Cash sources say feedlots are concerned the sharp drop in futures will give them less bargaining power in this week’s cash negotiations, especially given the fact packers’ profit margins remain in the Red.

 

About Commodities

Commodities are traded in units:

  • Oil is traded in barrels (bbl)
  • Wheat is traded in bushels (bu)
  • Coffee is traded in pounds (lb)

All units are set to a standardized quantity known as a “lot”. A lot represents the minimum quantity which can be traded in any given instrument

Take Advantage of These Commodities

InstrumentSpreads
(as low as)
Leverage*Trading Hours (GMT)
Crude Oil0.05
(USD)
fixed (1)100:122:00-21:10
Gold0.7 (USD)fixed (2)100:122:05-21:10
Silver0.07 (USD)fixed (2)100:122:05-21:10
Corn0.6 (USD)floating50:100:00 – 19:00 / 22:00 – 24:00
Wheat2.5 (USD)floating50:100:00 – 19:00 / 22:00 – 24:00
Coffee C0.5 (USD)floating50:107:35 – 17:55
Sugar no.110.1 (USD)floating50:106:30 – 17:55
Soybean2 (USD)floating100:100:00 – 19:00 / 22:00 – 24:00
Cotton no.21 (USD)floating50:101:05 – 18:25
Natural Gas0.005 (USD)floating50:122:00-21:10
Rice0.06 (USD)floating50:100:00 – 19:00 / 22:00 – 24:00
Copper0.0060 (USD)floating100:122:05-21:10
Palladium1.00 (USD)floating100:122:05-21:10
Platinum1.50 (USD)floating100:122:05-21:10
Cocoa10 (USD)floating100:108:05-17:55
  1. Trading commences each Sunday at 22:00 GMT and closes on Friday at 21:00 GMT. There is a daily break in trading between 22:15 – 23:00. Opening market orders and placing orders during the daily break is not possible.
  2. Due to low liquidity in global markets, between 22:00 GMT and 00:00 GMT, spreads for Gold, Silver and Oil might be widened.
  3.  

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

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