Grain and livestock futures all lower early Tuesday.
Old Crop Corn Makes Contract Lows, New Crop is Close
DuWayne Bosse with Bolt Marketing says corn made a new contract low in the September contract, with December trying to hold support.
Fund selling has picked up again in the corn market plus wheat is also dragging down corn.
However, the market continues to see pressure from favorable weather and historically high crop ratings and is all but ignoring any concerns with the derecho that hit Northern Iowa and Southern Minnesota Monday night.
USDA reported 73% of the corn nationally is in good to excellent condition down 1% from last week but up from the 68% condition last year.
Record yield ideas continue to dominate the market and result in corn paying no attention to bullish news on trade frameworks being announced or demand news.
Export inspections are running 29% ahead of last year but the market doesn’t seem to care.
What Corn Yield is the Market Trading?
Bosse says the corn market is trading a 185 to 186 bushel national corn yield which if true would put ending stocks back near 2.0 billion bushels.
However, he points out that in years of big corn acreage the uptick in acres comes in fringe states like the Dakotas where state yield averages are too low to significantly lift the national yield.
Plus, historically the corn yield has never hit a record in those years.
What’s Wrong with Wheat?
Wheat is back under pressure in what looks like technical or fund selling and reaction to the higher dollar.
However, the market has been frustrating says Bosse as winter wheat has failed to put in a seasonal low despite harvest being 80% complete.
Spring wheat ratings also dropped another 3% this week to 49% good to excellent which is also below last year’s 74% rating.
Demand has also been strong with export inspections running 6% ahead of a year ago, yet it fails to support the market.
Soybeans Lower But Holding Support
Soybeans are holding up better than corn and wheat and are holding technical support at the moment especially with improved crop ratings.
USDA reported 70% of the crop in good to excellent condition, up 3% from last week and now above last year’s 67% rating.
Weather has been the big story though as soybeans gapped lower on Sunday night with the extended weather forecast looking cooler and wetter.
Plus, soybean meal prices have continued to make new contract lows which Bosse says is a headwind for the soybean market.
The market is closely watching the China U.S. talks with hope of some sort of resolution on trade before the harvest season starts and the soybean export marketing window starts to open.
Argentina Lowers Export Taxes
Grains may also bee seeing pressure from news Argentina is cutting export tariffs on its corn, soybean, and soybean products.
Tariffs on soy meal and soy oil will fall to 24.5% from 31%. For soybeans, the rate drops to 26% from 33%, and for corn to 9.5% from 12%.
Cattle See Profit Taking
Cattle futures are lower Tuesday with some profit taking and maybe even hedge pressure after making all-time highs in both live and feeder cattle futures on Monday in response to the bullish USDA reports.
Bosse says these breaks have been continually bought by the funds who have been record long in the market for nearly the last year.
However, they currently don’t have a reason to liquidate unless there is a change in fundamentals.
Bosse says beyond a black swan event the only thing that could break the market is a slow down in consumers demand.
The national media is starting to pick up on the record retail beef prices but so far that has not had a chilling effect on beef demand.
