Grains start mixed but quickly push lower on profit taking, technical and farmer selling, plus harvest pressure.
Shawn Hackett, Hackett Financial Advisors, says grains are in transition right now as the funds have likely covered most of their short positions and are looking for signals for their next move.
Grains markets have had a respectable rally off the lows but have hit signficant chart resistance areas and may need more bullish news to start moving long in the markets.
What is the most likely catalyst?
Hackett says there are a host of factors including continued dryness in South America and the Black Sea region.
Rains are forecasted for Brazil and Argentina next week and if they do not materialize or fall short funds could add weather premium to the market.
The market is also awaitin the October WASDE report and possible yield adjustments from USDA.
Hackett doesn’t believe the agency will make many changes in the October report as harvest is not far enough along to set a yield trend.
The grain markets are also watching the Middle East tensions and if war continues to escalate that could bring the managed money traders into the grains.
He says the wheat market has already put in some geopolitical premium but may need more.
Cattle and hog futures started higher with help from the Jobs report data, which came in better than expected with 254,000 jobs added and unemployment at 4.1%.
However, that also sent the dollar sharply higher and that may be curbing some of the early buying interest in the meats.
