Grain futures all ended in the red on Friday with risk off selling.
Garrett Toay, AgTraderTalk, says it was tied to bearish outside markets and a selloff in the stock market and crude oil.
However, grains also saw profit taking after a decent rally off the lows and after hitting chart resistance.
“Yeah we had a 30 cent rally in corn off the lows, we’ve had a nearly 70 cent rally in soybeans. We had expected some sort of bottom around First Notice Day for the September contracts for the seasonality of things,” he explains.
Toay says to have this kind of a move ahead of harvest is kind of a gift for producers and it shows just how oversold the markets were and it may provide an opportunity for those who had supply in storage and need the room at harvest to make some sales.
So with the technical reversals scored Friday is the rally over in the grains?
He says, “I don’t think so. I am 75% confident we have put in our lows. I just think the rally may have run its course near term especially ahead of this crop production report this week from USDA.”
In fact, he thinks grains may trade choppy the next 30 to 45 days waiting for the USDA Report to provide direction on yield and with harvest about to ramp up.
“Do we push into new highs by October 15 probably not. When do we want to rally again? Probably when harvest gets past 50% complete would be a perfect time,” he adds.
As far as the September WASDE, Toay isn’t looking for big yield adjustments from USDA even though the weather probably took the top end of the yield off the corn and soybean crops.
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