Grains higher early Friday with livestock sharply lower.
Grains are up, seeing some end of week short covering says Tomm Pfitzenmaier of Summit Commodity Brokerage.
He says the markets are oversold and ripe for a correction after new contract lows in corn and soybeans on Thursday.
However, he says the 7-day forecast also looks a little hotter and drier which is helping out.
China bought another 7.4 million bushels of new crop soybeans Friday which is supportive and Pftizenmaier says there is still talk in the trade of additional purchases.
Plus, he thinks the melt down in the stock market may be bringing some money into the grains but he doesn’t think its enough to get the funds to blow out of their short positions.
So, according to Pfitzenmaier Friday’s bounce in the grains may not be sustainable.
He points to the larger yield forecasts already coming in from private firms and the fact that farmers still have a considerable amount of old crop grain in storage that will need to be moved before harvest and September contracts need to be rolled.
Live cattle and especially feeder futures plunge with the lower stock market.
Pfitzenmaier says the equity sector is imploding after the Jobs report showed only 114,000 jobs created, well below foreasts while unemployment rose to 4.3%.
There is also growing recession talk after Fed Chairman Jerome Powell’s signal this week they will start cutting rates in September.
Pfitzenmaier says that is negative for the protein sector.
Additionally, cattle are seeing pressure from $2 lower cash on Thursday at $188 in the South and $310 dressed in the North and a $2 drop in Choice cutouts.
Lean hogs are seeing spillover selling from the lower cattle and equities markets as well.
