Grain and livestock futures were lower early Tuesday.
Grains See Fund Selling
Grains futures were all lower and making new lows for the move as funds continued to liquidate long positions in corn, HRW wheat and the soybean complex.
Mark Knight with Farmers Keeper Financial says the funds are exiting as the grains have divorced from the crude oil market and are no longer adding war premium.
Instead the market has changed its focus to the extended weather forecasts.
Weather Trumps Crop Conditions
USDA’s first crop conditions of the season put corn at 67% good to excellent, which was below expectations and below last year’s 69% initial rating.
Soybeans conditions are at 66% good to excellent, which was also below expectations and the 68% initial rating from 2025.
However, Knight says planting and emergence are still ahead of average and the extended weather forecasts are trumping any concerns.
The drier areas of the Western Corn Belt and Plains are forecast to get some much needed rains, while the areas of the Eastern Corn Belt that were too wet looked drier. All areas were also looking like they would be receiving some much needed heat.
Seasonally the market also starts to top around this time period without a weather threat which is a headwind.
Funds Still Dangerously Long
The funds are still long over 211,000 futures contracts of corn and a combined 448,000 contracts in the soybean complex.
So Knight says there is a fear that if funds continue to liquidate there could be more downside price risk.
Funds have also been trimming their long position in hard red winter wheat but are still long over 28,000 futures contracts.
Pressing Chart Support
This comes as all of the grain markets were making new lows for the move on Tuesday morning and violating some key support areas.
Knight says in December corn he is watching the $4.68 to $4.70 area as that is where the 200-day moving average lies, as well as the April lows.
For July corn the market has already fallen below $4.50 and the 200-day moving average of $4.56 1/2.
July soybeans are still holding the 100-day moving average but the November soybeans need to stay above the $11.70 area which is also the 50-day moving average.
What Can Change the Lower Trend?
So what are the only chances to change the lower trend in the grain markets?
Knight says some sort of weather problem, which seems unlikely at this point.
The other possibilities are evidence of China buying U.S. ag products, as talk that China was in the market looking for bids or may be lowering import tariffs on U.S. grains and oilseeds, have failed to spark any buying.
Acreage Shift
The other major shock to the market could come in the June 30 Acreage Report.
However, Knight is expecting 1 to 2 million more acres of soybeans, which could be bearish. While corn could lose that many acres due to higher fertilizer costs.
Cattle Fall on NWS Concerns
The cattle futures were also lower on Tuesday morning with additional fund liquidation and profit taking after the stronger close on Monday.
After shaking off the latest case of New World Screwworm (NWS) only 31 miles from the U.S. border in a six month old sheep to start the week, the newest concern is the U.S. potentially having a case.
Rumors have circulated about a case and USDA has a news conference schedule for 12:15 PM Central Time with Secretary Brooke Rollins and other APHIS officials to discuss NWS.
That spooked the market early in the session.
Cattle Futures Discount to Cash Supportive
However, Knight says the uptrend lines on the cattle charts are still intact and the futures are trading at a signficant discount to the cash.
So he thinks that should keep the futures market from falling much farther.
