Grain futures are lower early Thursday with a mixed trade in livestock.
Corn and Soybeans See Profit Taking on Harvest Pressure, Higher Dollar
Corn and soybeans are seeing follow through selling and profit taking after the inability to close above chart resistance on Wednesday. A higher dollar is also applying pressure.
Darin Newsom, senior market analyst with Barchart, Inc. says corn and soybeans are also seeing a pick up in farmer selling or hedge pressure as harvest expands across at least the Central and Eastern Midwest.
Even though yield reports are coming in below last year on early harvested corn and soybeans it will be a large crop across the U.S. and the market will need to find a home for those bushels.
Basis Levels on Soybeans the Worst Since 2019
Basis has widened on soybeans especially in the Northern states that are even more dependent on the China export market.
However, Newsom says the National Soybean Index came in at $9.6325 Wednesday night, also 6.0 cents lower for the day. This left national average basis at 80.5 cents under November futures as compared to last Friday’s final figure of 79.25 cents under and the previous 5-year low weekly close for this week at 62.5 cents under November.
He says it should be noted last night’s Index would be the lowest end of September price since 2019’s $8.25 and put available stocks-to-use at roughly 16.8%.
China Deal or No Deal?
The soybean market continues to wait for a deal and soybean export business to China.
New crop exports are now at 378 million bu. which is down 36% from last year when China was actively buying U.S. soybeans.
Weekly exports were at 33.9 million bu. with Egypt as the top buyer followed by Mexico.
However, Newsom is not optimistic about a deal with China that includes soybeans and even if a framework is announced he doesn’t think it will be enforceable.
“You remember how the Phase I deal turned out with China,” he says.
FOMC Lowers Rates but Dollar Rallies
The FOMC lowered interest rates by .25% on Wednesday, which was no surprise to the market but Newsom says the reaction might have been.
The U.S. dollar strengthened after the announcement and continued on that path early Thursday.
Newsom says this is an indication to him that the market thinks inflation may have a chance of creeping back in.
In fact he says inflation is already here but the tools used to measure it are not accurately showing it.
