Grain and livestock futures close higher....finally!
Dave Chatterton, Strategic Farm Marketing, says grain markets saw a technical bounce as they were oversold after hitting 3 1/2 year lows.
He says, “There were also rumors that China was stepping in for some U.S. corn that follows their first purchase of U.S. soybeans earlier in the week. So, hopefully there is some fire to that smoke. We haven’t had confirmation of that yet but it did help hold the corn market up today and it’s thought China will also need soybeans for the reserve. However, so far they’ve been patient as they are value buyers.”
However, it was also positioning ahead of USDA’s data dump.
The market participants have been leaning bearish heading into the report on ideas USDA will need to increase supplies of corn, wheat and soybeans after finding additional inventory in the Quarterly Stocks Report, plus 1.4 million more acres of corn.
“There’s no indication we’re going to get any bullish news from the USDA report,” he adds.
He says rains picked up in the Eastern Corn Belt this week had funds hammering the short side of the grain market on ideas of trend line yield and it may have more downside potential.
“After the report we go back to trading weather and yield potential and without a big production threat or improved demand which is going to probably have to come from China, it may be a tough to rally the market,” he says.
Chatterton says he is also concerned this pattern feels similar to 2012.
“At the lows we got into that $3.50 in corn, that $9.00 number in beans and the $4.50 area in Chicago wheat and it was a very painful and lasted for nearly five years,” he reflects.
The cattle market popped after a three lower closes but he says it may be difficult to retrace any more with cash and boxed beef moving lower.
“I am cautious because seasonally we usually see the peak demand around July 4 and boxed beef and cash look like they have topped,” he says.
Lean hog futures recovered with short covering off contract lows.
“We saw the same type of dead cat bounce in the hogs with big up front supplies and a week of poor exports,” he says.
