Grain and livestock futures all end in the red on Friday with risk off selling.
Garrett Toay, AgTraderTalk, says it was tied to bearish outside markets and a selloff in the stock market and crude oil and after a disappointing Jobs report.
“The jobs numbers were not great and there’s people talking about a half point cut in September but big picture a full point cut by the end of the December meeting,” he explains.
Grains were overbought, so he says the pullback was also profit taking after a decent rally off the lows and after hitting chart resistance.
“December corn was up against the bottom end of this old channel which was resistance. We tested it yesterday and the day before and it didn’t show us that it wanted to push above those levels. November soybeans tested the 50 day moving average and $10.30 3/4 for the first time since the end of May and failed.”
However, there was likely some positioning ahead of the September WASDE.
His belief is that the biggest yield was printed 30 days ago and the top end of the crop has been taken off by the heat and lack of rain but even then he’s only expecting small adjustments from USDA in the report.
“We’re talking minimal changes. I think we’re still above 180 on corn and instead of 183, were at 181, 182. And on soybeans one bushels cuts are rare,” he states.
Toay says the grain markets have likely put in their lows but may be choppy the next 30 to 45 days as the market looks for confirmation of yield from the USDA Report numbers and harvest results.
“When do we want to rally again? When the harvest is 50% complete would be a perfect time,” he says.
Cattle futures had a tough day Friday and a down week following $2 lower cash and lower cutouts and he thinks a bigger correction is in store.
“We are now in a downtrend in cattle,” he says.
Hog futures saw risk off technical selling as well and a push from lower cutouts, but he doesn’t think that market is done going up yet.
