Grains and livestock end higher except for wheat, seeing commodity wide buying.
Mike Minor, Professional Ag Marketing, says corn and soybeans were oversold and due for some corrective buying or short covering with funds near to record short in both markets and November soybeans making new contract lows Tuesday morning.
However, in his opinion for the grains to sustain a rally will be extremely difficult.
The market somewhat disregarded the derecho event that hit parts of Eastern Iowa and Illinois, Indiana and Southern Wisconsin, resulting in strong winds, tornadoes and some flash flooding.
Minor says the funds are trading a trend line yield with high crop rating and the idea that “rain makes grain” and the U.S. crop will need a much bigger weather event to produce a short covering rally.
Plus, he adds that even if they do farmers will likely sell and cap the rallies with the large amount of old crop inventory yet to move, including 3 billion bushels of corn on-farm.
Technically, December corn has held $4.00 and has good support just under that level and fairly strong demand.
November soybeans made a new contract low around $10.37 but could be vulnerable to further losses according to Minor, due to concerns of another trade war with China and slow exports.
Cattle were slightly higher but are in a consolidation pattern under the recent highs with cash and cutouts softening seasonally.
However, Minor thinks cash has held up well relative to his expectations and with the big discount futures hold to cash.
Lean hog futures also saw technical buying as Minor says that market was oversold.
He thinks the market will have trouble building on it with the bigger up front supplies, but he is at least encouraged that cutouts are improving slightly.
