Grain and livestock futures collapsed and closed in the red on Tuesday.
Vince Boddicker of Farmers Trading Company says funds were back selling in the grain markets with risk off spillover from outside markets including an implosion in crude oil.
However, he says there were other factors that weighed on the grains, including improved weather in South America and some rain over the weekend in Northern Brazil.
CONAB also released estimates for Brazil’s crop and put soybean production at a record 166 million metric tons, with corn at 199.7 million metric tons.
“That’s huge as those are record numbers. The trade is going to look at that and say oh, let’s not forget that they can still get a good crop even though they have been dry,” he explains.
China economic news continues to be poor despite the massive stimulus effort by the government.
Boddickers says initally that was seen as positive but now there are questions about whether or not its doing any good and the impact that could have on consumer demand.
USDA did repot a flash sale of 4.85 million bushels of soybeans sold to China Tuesday morning but neither that or the record NOPA crush figure at 177 million bushels could provide a spark for soybeans.
Corn also saw harvest pressure and a pick up in farmer selling with at least two-thirds of the crop still in the field.
“Now the question is how much of that corn will move to town at harvest time, that will make a difference on basis,” he adds.
Wheat collapsed on technical selling and was removing weather premium with better rain chances for the Southern Plains and Black Sea production areas.
How much technical damage was done after the big down day and are the funds going to push the short side of the market again?
Boddicker says December corn is still above critical support from $3.95 to $3.97, while November soybeans held support at $9.78 1/2 and Hard Red Winter wheat is still well above long term support of $5.70.
Cattle and lean hogs were also lower on profit taking as markets are overbought, plus they saw hedge pressure.
“I think in the cattle we were overbought plus how far will the packer push this thing? Boxed beef has been amazing the last 10 days putting on over $14, that’s $5 more than we put on in this same time frame last year when we bottomed and it tells us the demand is there,” he says.
Boddicker says the funds have been buying in the hog futures but the December contract is $7 higher than a year ago.
Although he says slaughter figures the last three weeks have been running above what USDA had projected in the recent Hogs and Pigs Reports.
“So the question is are there less hogs or are they still coming to town,” he adds.
