Grains ended mostly lower on Friday and for the week, while cattle, hogs and milk futures were all higher.
For the week: September corn was down 10 cents, December fell 8 1/4, September soybeans plunged 32 1/2, November soybeans dropped 31 3/4, September soft red winter wheat fell 21 1/2, September hard red winter wheat lost 7 3/4 and September hard red spring was down 13.
Bryan Doherty with Total Farm Marketing says grain markets were lower on Friday and for the week with pressure coming from non-threatening weather, big yield ideas as well as trade uncertainty tied to tariffs.
Tariff Fears Re-emerge
President Trump announced the Aug. 1 tariff increases ranging from 10% to 41% on various countries which will be implemented by Aug. 7.
There was no word on retaliation but the financial markets were down sharply and that risk off selling and attitude seemed to spillover to the grain markets.
Corn and Soybeans Fall Under the Weight of Big Crops and Ideal Weather
With non-threatening weather and ideas of big crops getting bigger the funds have been selling in both the corn and soybean complex.
“I think the tariff concerns are a player, but they’re sort of adding a little more weight onto the bigger weight on the market, which is this good weather and the reality that it doesn’t look like all of a sudden we’re going to run into a real brutal hot and dry period during August,” he says.
While end user demand has surfaced on lower prices being perceived as a value, with the big crops coming they are also comfortable to buy as needed.
On Friday November soybeans made new lows for the move before bouncing off those levels but posted a lower weekly close. December corn was also down for the week and while the contract low held it may be vulnerable during August.
Could Corn and Soybeans Continue Lower in August?
Doherty says in August the sesaonals usually point lower and there are plenty of farmers who will need to sell inventory to make room for the upcoming harvest.
“There is old crop that has to come to town. Last year December corn bottomed at $3.85 late August. More acres this year, a more highly rated crop compared to a year ago with less acres. So bigger supply. Granted, bigger demand, stronger exports, reduced carryout, 500 million bushels from expectations about a year ago at this time, but you got those increased acres. So for right now, it looks like the path of maybe least resistance is a continued sag in the market,
potentially retesting last year’s low,” he says.
August is the key month for soybeans and with favorable weather Doherty thinks there’s downside risk.
“I think they end up slipping into new lows or retesting the lows from earlier than the year. I’ve got a head and shoulders formation on charts. If you follow those, that’s about another 50, 60 cents down in beans,” he adds.
Grain Marketing Strategies With Low Prices
With prices at or near contract lows many farmers are looking for marketing strategies for old and new crop bushels.
Doherty says while farmers don’t like to sell at these low prices they may need to look at pricing some bushels ahead of harvest as he thinks there is more price pressure on the way.
“So get rid of the old crop if you want to retain the the ownership of that talk to your advisor, know how to do that. I think marketing right now is more important, Michelle, than ever. There’s carry in the market to look at for new crop. There’s option call premium that you can challenge the market to generate some revenue streams that comes with lots of risk though and margin call potential. But these are the kind of things that really have to be looked at and measured and measured carefully and the risk measured versus let’s say doing nothing. That’s still a strategy, maybe a good strategy,
maybe a terrible strategy, only time will tell,” he explains.
Cattle Recover With Higher Cash
Cattle futures were able to shake off the plunge in the stock market and latch on to the higher cash trade news to stage a recovery.
Cash trade broke in the South at $236 in Kansas, up $3 from last week’s weighted average, with Texas at $235. The North saw $247 live trade in Western NE after trade on Thursday ranging from $242 to $245 and $383 dressed, up $3.
Has the Cattle Market Topped?
After a tough down day on Thursday which featured end of the month profit taking the market did try to negate the bearish reversals.
Whether or not the cattle market has topped is still up for debate but Doherty says the action Thursday at least signaled caution.
He points to the fact that beef demand slows this time of year and choice boxed beef values have cooled nearly $30 from their highs earlier this summer.
Plus, even though cash trade was higher again this week he’s not sure how long packers will be willing to pay up for cattle with their margins in the red.
Have Milk Futures Bottomed?
Class III milk futures were higher on Friday and looking at a chart it seems as though the market is trying to bottom.
However, Doherty says he still cautious.
“I’d like to think so. I think butter, cheese, blocks, barrels. They’re showing some signs. We saw some advance in cheese prices today. I’d like to think that the market is bottoming. Keep in mind the overriding, bearish tone in the milk complex with the increased production in the last USDA report,” he says.
