Grains end slightly higher on Thursday along with hogs, while cattle futures end sharply lower.
Grains Bounce Late
Don Roose, U.S. Commodities, says grain futures all ended slightly higher Thursday with positioning and profit taking end of month and pre-holiday.
He says corn and wheat likely saw some short covering with the funds short in both of those markets, plus key support areas held.
“You have a three day weekend coming up, anything can happen on a three day weekend, particularly with some of these trade talks out here. Same thing with the weather patterns can change,” he says.
Soybeans in a Holding Pattern Assessing Yields and China Demand
Roose says soybeans are in a holding pattern as the market tries to determine the size of the crop.
August was a dry month for portions of the Eastern Corn Belt, like Ohio, potentially cutting yield and so Roose says the market may need to add some weather premium.
The problem is the market is also waiting for China to buy U.S. soybeans and until they do the rallies are likely to be capped.
While this week’s new crop export sales were solid at 50.3 million bu. total new crop sales are at 265.6 million bu. and down 29% from a year ago. This is an 18 year low.
Crop Getting Smaller With Disease?
Roose says the corn and soybean markets have likely traded the largest yield numbers and are now pricing in the issues with disease and the dry conditions to end the season in some areas of the Corn Belt.
“So you know I think you know we had big numbers out of the government but then we had the pro farmer tour going through some others coming up with some a lot of disease issues out here and in both corn and soybean. So, very realistic that we’ve seen the biggest numbers in corn and soybeans from a yield standpoint going forward and so then it’s going to be up to the demand going forward,” he says.
He says farmers are not willing sellers at these low price levels on cash corn and soybeans until they see what they have what the insurance is and what the outlook for some of the demand is.
Strong New Crop Exports for Corn and Wheat as Well
Weekly new crop exports were also strong for corn at 82.3 million bu. and wheat at 21 million which also helped the rally.
Roose says end users are finding good value at the lower U.S. prices and so demand has been solid.
Grains Trying to Confirm a Low?
Roose says the fact that none of the grain markets have been able to break is encouraging.
“The wheat market, maybe telling us the picture. We’ve been on a holding pattern, 20 cent trading range. We try to rally but we can’t. We try to break in the wheat but we can’t and I think it just had fair market value on the wheat. Does the same thing happen with the corn and soybeans going forward?” he explains.
So he thinks the grain markets are trying to confirm a bottom and Thursday’s action was evidence of that.
“I think we’re very respectful but the crop may be getting smaller not bigger. You know we saw big numbers out of the USDA. The corn market December put a low in at $3.92. Very similar to last year we went to $3.85 on Dec corn August 24th and we held and went up from there,” he says.
Cattle See Routine Profit Taking?
Live and feeder cattle futures ended sharply lower after making new contract and record highs once again.
He chalks this up to routine end of month profit taking by the funds who are near record long in the cattle futures.
“The bullish fundamentals are still in place and there is no sign of any chart topping action yet,” he explains.
Lean Hog Futures See Technical Buying and Follow Cattle
Lean hog futures have had a chart breakout this week with the deferred contracts scoring new highs for the move.
Roose says this has been tied to technical buying but hogs have also been chasing the record high cattle market.
The futures discount to the cash is also supportive.
