Grains futures all close higher Friday and post higher weekly closes.
So, was it all end of month fund short covering or are the markets changing trend and trying to put in a bottom?
Bryan Doherty, Total Farm Marketing, says the technical action was encouraging with soybeans closing above the downtrend line and higher for a second week, plus key reversals in corn and wheat.
“It looks like the funds are continuing to get out of their short positions,” he adds.
However, to confirm the lows in the market, he wants to see the grains close higher again next week.
“So typically in corn markets we put in what’s known as a saucer bottom. This week went a long way into making fund traders second guess how short they want to be and for end users to second guess how long they want to wait to buy, because prices are at good value,” he explains.
However, he says there were also some fundamental positives in the market that drove this week’s rally including hot dry weather coming during the critical soybean pod and corn kernel fill stage.
“It looks to me like the hot weather that the Southern third to half of the Midwest has experienced might be taking a little bit of that shine off the yield potential in soybeans. Bottom line is the USDA has some pretty robust numbers out there and it might be more and more difficult to argue that this crop can measure up to those numbers. So we may have worked the most bearish yield figures into the markets,” he adds.
Another bullish sign was the lower prices uncovered some end user buying.
Weekly new crop corn and soybean exports were very strong and so was the weekly ethanol production number according to Doherty.
“The end user knows these grains are on sale and they are buying on value,” he says.
Doherty also points out that with grain prices below the cost of production that may start limiting the acreage farmers plant in 2025 which can also forge long term lows in markets.
Live and feeder cattle futures finished higher Friday and for the week, despite steady to lower fed cattle cash prices.
So can the cattle market build on that?
Doherty says thinks so, not juts because supplies are tight but because of how well the market held together in a time when demand seasonally starts to slow.
Lean hog futures also extend gains Friday and for the week on fund buying but what fundamentals are supporting the market?
He says export demand has been strong and the futures, especially deferred contracts, are trading at a discount to the Lean Hog Index.
