Grains are lower early Friday seeing end of the week profit taking with some rain chances creeping into the extended forecast for parts of the Corn Belt and some cooler temperatures.
Darin Newsom, Senior Market Analyst with Barchart, says this is typical in a weather market and tit could quickly recover on noon model runs turning back hotter and drier and that could also produce fireworks on Sunday night.
However, he says the recent rally in corn and soybeans off contract and near term lows has also been fund short covering.
So he is watching the monthly closes because if they close higher that could be a sign of a technical bottom.
That could create some additional technical buying in corn and soybeans and cause a positive change in trend he adds.
However, even if those technical marks aren’t achieved Newsom thinks the market may have a tough time retesting the July lows.
“We hit a low of $4.03 on the December corn contract and I wouldn’t think we’d need to go much lower than that,” he adds.
Newsom is also watching the reallocation of money in outside markets including the stock market and what that might mean for ag markets.
The stock indexes have had a horrible couple of weeks and if they close lower for the month that could pull investment money out of the stock market that might look for a new home in places like the ag markets, particularly grains according to Newsom.
The stock market is recovering early Friday as the PCE data was positive at 2.5% but does it give the Fed the ammunition they needs to lower rates?
Newsom thinks the Fed will stay the course for now and says the Fed fund futures are indicating a rate cut won’t occur until at least September.
