Wheat and soybeans rally Monday, with corn just fractionally lower. Cattle fail.
Ted Seifried, Zaner Ag Hedge, says corn ended well off the retest of the three year lows the market scored on Friday.
He thinks the corn market is over sold but has digested and priced in most of the bearish news tied to weather and the USDA reports and is due for a corrective bounce.
“So you get the feeling, yeah, we’ve gotten past the shock of the USDA reports, the higher acreage, the higher quarterly grain stocks,” he says.
Funds are also the shortest they’ve been in the corn market for this time of year and so Seifried thinks this might be a good time for them to come in and take some profits on their short positions and provide a technical bounce, especially with a holiday coming up and weather still uncertain.
The caveats to corn finding a bottom include the fact that USDA will have to reconcile the higher stocks and acreage in the next WASDE report, which could push up both the old crop and new crop balance sheets.
Plus, there is the large amount of corn farmers have stored on farm and that selling has yet to hit the market.
“On farm storage on corn is up 37% year over year and we have a little over three billion bushels of corn just setting on farm. The scary part is a lot of that is going to have to move before this new crop comes in and if the crop looks good that could start to happen at the end of this month in a big way,” he says.
Soybeans were higher on short covering and corrective buying but did get some spillover support from the higher soybean oil market.
Seifried says the forward spreads or inverse also indicates there are end users, including crushers, who are trying to pry soybeans out of farmers hands.
“There is this continued tightest in the old crop market. Farmers are just not selling. On farm storage is up 44% from last year and farmers have 430 million bushels of beans in storage. Everybody’s waiting for $13 soybeans,” he says.
Wheat was higher on short covering as the market has gotten very oversold and with harvest pressure easing.
“Technically we were due for a bounce in wheat, but the fundamentals haven’t changed to provide a bullish story for wheat,” he says.
Cattle futures see profit taking with the market disappointed in the steady cash trade in the South at $190 live. However, Seifried isn’t calling a top there yet.
