Grain and livestock futures all close higher on Tuesday.
Randy Martinson, Martinson Ag, says grains were technically able to build on higher weekly closes.
“We finished August with the corn and Chicago wheat posting key weekly reversals and that brought some buyers back into the market place,” he says.
Plus, with the selloff in outside markets like the stock market and crude oil there was some buying in the ag sector tied to money flow.
“Grains are at four year lows, so we’re looking pretty cheap,” he adds.
Martinson says that prompted the funds to take some profits on their short positions in the grains.
However, he thinks buying also stemmed from ideas yield and crop conditions may be declining with the recent hot dry weather and that dry trend persists in the extended forecast for much of the Corn Belt.
“I think we’ve printed the highest yield we’re going to see and I think in the September report USDA will lower harvested acres for prevent plant and drowned out spots, so production may drop,” he says.
Demand has also been picking up with another 4.85 million bushels of flash soybean export sales to China and strong export inspections for all of the grains.
“There has been talk that China has bought more U.S. soybeans especially as the price has dropped nearly a $1 below Brazil. So we are the cheapest game in town,” he adds.
Export inspections were strong for all the grains with corn at 38 million bushels, soybeans at 18.3 million and wheat at 21.2 million.
Martinson says soybean oil was lower with sharply lower crude oil, plus news that China has initiated an anti-dumping case on canola imports from Canada.
Seasonally this is the time the wheat market should be bottoming but Martinson says quality issues with the spring wheat is going to cause the market to bid up for higher quality wheat.
Southern Plains and Black Sea dryness is also supporting the wheat market.
Cattle futures extended gains after a higher week last week and strong midday boxed beef prices indicated good holiday clearance.
Lean hog futures continued to see fund and technical buying with the futures discount to the Lean Hog Index supportive. Higher cutouts at noon by over $3 provided a fundamental push as well.
