Beef Demand Strong but Funds De-Risk
Not much to get excited about in the markets yesterday, but world beef demand still looks optimistic says Peter Murray with ED&F Man OTC Structured Products Group.
Murray…”Demand seems to be there. Demand seems to be strong. And one of the biggest drivers of that is obviously international trade. Tariffs had come down almost 12% as of January 1st with that new Japan deal. On April 1st they'll come down about another percent. And just today, the Canada, Mexico, U.S. deal got signed. I think the other biggest factor is the fund position in live cattle, where they currently are and how they can affect the market moving forward. So that index fund position has gotten to over 160,000 contracts long. That's almost, I think, 27% of total open interest. Now, while that's great because it got us to a spot where it rallied the market nicely, when there is a little bit of nervousness in the market we can see a flight to safety from, from some of these funds, and I see a tendency for them to liquidate futures positions.”
In markets yesterday:
Chicago March Wheat futures closed down $0.07 ½ to $5.62 ¼.
Kansas City Hard Red Winter Wheat down $0.10 to $4.72.
March Corn closed down $0.02 ¼ to $3.84 ¼.
Portland prices for soft white wheat of ordinary protein unchanged at $6.30.
Club Wheat of Ordinary Protein also unchanged ranging from $6.30 to $8.05.
Dark Northern Spring wheat down $0.06 ½ yesterday ranging from $6.70 ¾ to $6.81 ¾ for 14% protein.
Live Cattle futures were down $0.40 to $121.75 on the February board. March Feeder Cattle were also down $0.42 ½ to $134.97 ½.
Class III milk climbing back up $0.25 at $17.64.