Grain markets closing mostly lower again on Thursday with more contract lows in corn.
DuWayne Bosse, Bolt Marketing, says corn continues to grind into new lows, but it’s not just fund selling. He says farmers are throwing in the towel. “It’s not this week. I think the funds were selling it right along with farmer, but I think farmer selling was the big key. You’ve got March option expiration on Friday and farmers have those basis contracts that they either need to set the futures price this week or roll to another contract which I hope they’re not doing to be honest with you.”
Bosse thinks March corn might have to drop just below $4 before it finds a low. “I think if we print a $3.98, up front here on the futures side up front, maybe that will be the low.” However, even if a low is forged he thinks the market will carve out a trading range of between $4 and $4.25. “Because every time you rally there’s still going to be farmer selling on top of this thing.”
Soybeans drug down the corn with some rain added to the forecast in Argentina and Brazil soybean basis levels continue to trade well below the U.S. prices. “Brazil production estimates have been coming in lower and even the Argentina projection have dropped. You’d think that would be a bullish story, but their cash basis just keeps dropping, meaning their farmers are selling and they’re comfortable with the size crop they believe they have.” Bosse says that means U.S. soybean prices have to move lower to compete.
March soybean futures made new lows for the move on Thursday and are just a few cents off the contract low of $11.45 ¼. Bosse says prices will likely test those levels or could even drop below that price.
Wheat prices ended mostly lower except Chicago wheat, which held steady. The wheat news has been bearish says Bosse, with global wheat prices falling and the U.S. market should follow. However, Chicago has been building off of Tuesday’s key reversal higher. “I like it, but the fundamentals aren’t bullish for wheat.”
Live cattle made new highs for the move then set back on profit taking and hedge pressure. Bosse says it’s likely there was some caution going into the USDA Cattle on Feed Report on Friday. Lower corn prices supported the nearby feeder cattle futures, although they ended off highs.
Lean hog futures scored new highs for the move led by the cash rally. “Our cash has been on fire, cutouts have been on fire,” he says. Futures also closed above chart resistance and look strong technically.
