Grains ended in the red with better-than-expected crop ratings on corn, spring wheat and winter wheat.
Plus, Vince Boddicker, Farmers Trading Company, says with corn rated at 75% good to excellent the market sees the crop getting off to a good start, so the mentality has changed to “rain makes grain.”
“You’ve got to believe that’s a lot of it. We had the run up in grains prices and it seemed like when we got to right before the Memorial Day weekend and they couldn’t take out the highs we got some of the month selling and then you have to have something to change that psychology and get the trade to want to buy,” he says.
In the case of soybeans, he says the slow pace of old and new crop exports are also a drag with end users buying hand to mouth. “We have the lowest new crop soybean exports in the last 19 years.” The lower product values have also been bearish for soybean prices.
Wheat futures saw double digit losses with the Russian crop concerns becoming old news and the U.S. winter wheat harvest picking up steam.
“Wheat harvest in Texas and Oklahoma is ahead of normal and early yields are better than expected. Plus, there is already talk ending stocks in the June WASDE pushing above 800 million bushels,” he explains.
Technically, Boddicker says the grain markets are oversold and could see a rebound at any time. “In corn it could be 10 to 20 cents but to get more than that it will take another catalyst,” he adds.
Cattle futures saw early gains but ended mostly lower. Boddicker says the action was disappointing but at least both live and feeder cattle futures held Monday’s support areas on the charts.
“I would not be surprised to see Monday’s lows taken out. I have some cycle lows coming in next week in both the feeder and the fat cattle market.”
Boddicker says the June live cattle contract is still at a discount to the cash but there is some anticipation that cutouts could top pulling cash lower to meet the futures.
Lean hog futures made more new lows for the move as the funds continue to liquidate their long position.
“I thought the funds were done liquidating last week but it seemed like today when the July contract took out that February 13th low there were probably stops underneath that and it just ratchetted lower. Now you have to see where we hold support.”
