Grains close lower on Thursday, with livestock mixed to lower as well.
DuWayne Bosse, Bolt Marketing, says grains saw profit taking after running up into some chart resistance as several of the markets hit 38% retracement levels off the summer lows.
“It felt like we just ran out of bullish news and when that happens you see profit taking,” he says.
He says there was a lack of buying interest as well the fund short covering that produced the big rally off the August lows is starting to subside.
“I do think the funds are done. I think they are flat right now in the grains, even the wheat market. Now that they are out of their short positions, which I can understand with some of the uncertainty with war tensions in the Middle East, the big question is do they want to be long?” he explains.
Some of the pressure also came from farmer selling as harvest pressure is picking up and overwhelming any technical buying.
The grain markets are still watching global weather and rains forecasted for Brazil and Argentina next week had the corn and especially the soybean market removing some weather premium.
Bosse says, “If we come in here Sunday night and Monday and these rains are realized or chances look stronger in the forecast or heavier, that’s also going to put more pressure on the soybean market as weather premium is taken out.”
Wheat also took a break after a big rally driven by global weather concerns in the Black Sea and Australia, plus geopolitical tensions in the Middle East.
“We may have enough risk premium in the wheat, that was a nice rally over there. You are a dollar off the harvest lows and got above the 100 day moving averages for all three classes,” he says.
Markets may take a break as well with some caution ahead of the October WASDE.
Some private estimates have raised corn and soybeans just slightly but Bosse thinks it may still be a little early for USDA to make big adjustments since the harvest isn’t even a quarter complete.
Cattle and hog futures closed mixed to lower on profit taking and hedge pressure following new near term highs on Wednesday and even though cash cattle trade so far has been higher.
“We’ve rallied a long way here and were overbought so we likely saw some profit taking in cattle, but we didn’t take out yesterday’s lows,” Bosse adds.
