Corn bounces off another new contract low and soybeans are also higher on short covering early in the session. Soybeans also made new lows for the move before recovering.
Can row crops hold these gains into the close?
Tomm Pfitzenmaier, Summit Commodity Brokerage, says both markets are oversold and due for some sort of correction. “And heading into a three-day weekend some traders may be taking some profits off the table.”
However, he cautions that the funds are still selling rallies and markets can correct their oversold status just by moving sideways. “It seems like every time we get these little rallies there are plenty of people setting above the market ready to sell it.” Pfitzenmaier says funds are near record short in most of the grain and oilseed markets, but the farmer is holding a big, long position against that just by the large amount of grain in storage that is left to be sold.
Pfitzenmaier says there isn’t a lot of bullish news to support the grain market either especially after the bearish USDA data released on Thursday showing growing stocks.
He is also watching the outside markets which are a bit bearish for commodities on Friday. In fact, the wheat market is under pressure due to the dollar rallying and the stock market falling. He says the PPI data was hotter than expected and again may lead to higher interest rates for longer.
Despite the outside market bearishness and lower cash trade this week, cattle are extending gains. Pfitzenmaier is optimistic the fundamentals will continue to support that market on breaks.
Hogs started higher after a strong rally the last two sessions on strong exports and talk of Congressional action on Prop 12. However, the market quickly set back on profit taking after hitting chart resistance.
