Corn and soybeans ended with slight gains on Thursday, with wheat and cattle lower.
Corn Bounces Off Support
Kevin Duling with KD Investors says corn showed resilience once again shaking off early losses.
Futures bounced off support on the charts and he thinks the market is trying to probe for the low similar to last year.
“I look at the corn and it was able to hold the same low that we made on Tuesday, the buying came in and pushed it higher, it just feels like we’re walking on that same exact narrative and chart pattern that we had last year at this time and we made the lows in August and and had a pretty good month in September and we’re kind of working on that now,” he explains.
According to Duling, farmers are not anxious to make any sales on corn at these prices and until they see how big their crop is.
Corn Waiting for Yield Confirmation
Corn futures are also trying to determine the crop size especially with the onset of disease and drought in the Eastern Midwest and may mark time until it gets confirmation.
Private estimates still have corn yield close to USDA and Duling isn’t sure the market will get the confirmation it needs in the September WASDE.
So, he thinks the market will wait for harvest data comes off the combines.
“Personally I think it’s got to come out of the field because I mean the WASDE is known to really slow play adjustments on the way back down on yield,” he says.
Soybeans Bounce But Can the Market Hold Without China?
Soybean futures bounced off of support as well at the 200-day moving on the charts Thursday to close slightly higher but unlike corn Duling doesn’t think the market can build on it.
That’s because the market is more fixated on the lack of China export demand.
Even if the soybean crop is getting smaller due to dry conditions in the Eastern Corn Belt and due to disease, he says the yield would have to drop substantially to make up for the loss of China export business.
Wheat Futures Hit New Contract Lows....Again
Wheat futures were lower again for the day but at least ended off of session lows.
Soft red winter and hard red winter wheat both made new contract lows before seeing selling exhaustion but Duling is hopeful the market is getting close to carving out a low.
The funds or managed money traders took profits at the end of August and covered short positions and now it looks like they are pushing the short side of the market.
“Wheat gets hammered by the funds more than the rest because they get more response out of it. And today was encouraging to me just seeing it down eight or nine and then only closing down a couple cents. It’s like, okay, they put
a lot of ammunition into really hurting that market and they didn’t succeed at it,” he says.
Is Wheat Too Cheap?
At these low price levels Duling thinks wheat is too cheap.
Export sales have been strong at these low prices and the U.S. is competitive with a bid under Russian wheat values.
“I mean, we’ve got great demand. We have great. We’re the lowest price in the world by quite a bit. So, why do we need to cheapen up if we already found enough demand to take us well beyond what USDA set for exports?” he questions.
Cattle Continue to Fall with Lower Northern Cash Trade
Live and feeder cattle futures ended lower again on continued profit taking and consolidation.
However, the lower cash trade in the North may have also sparked some of the selling.
A light trade was reported. Southern live deals were at $242, fully steady with last week’s weighted averages. Northern dressed trade at $383, $2 lower than last week’s weighted average, basis Nebraska. Live sale trade in the North was at $245, down $3.
Duling says this could spur a deeper correction in the live cattle futures.
