Grains start lower Wednesday except a few wheat contracts, with livestock mixed.
Grains ended well off session highs Tuesday and staged a disappointing close after hitting chart resistance and seeing a pick up in farmer selling trim gains.
Darin Newsom, Senior Market Analyst for Barchart, says the grains continue to be resilient on pullbacks and could end up higher on the day as funds are exiting shorts.
He says the investment community is taking their profits after being short grains for so long and moving it into other markets including the stock market and the softs.
However, he doesn’t think the funds have a reason to be long the grain markets yet.
That could change as the corn and soybean futures may need to add some weather premium tied to Brazil’s drought and with possible harvest delays and damage to U.S. crops from Hurricane Helene.
Newsom says demand has been getting better in the grains as we have seen flash sales on soybeans and even corn to Mexico this morning to the tune of 7.1 million bushels.
However, he doesn’t think its enough yet to chew through the large supplies in the U.S. and the spreads are still showing that.
There has been some buying as well in markets like soybeans, cotton and hogs this week tied to China’s economic stimulus move but Newsom thinks that will be short lived as it is not likely to translate into a big increase in business for the U.S.
Cattle and hogs are seeing two-sided trade but are well supported and moving with the stock market and possible meat demand.
