Grains have a tough down day on Monday, with a mixed close in livestock.
Soybeans were down 25 to 28 cents and made new contract lows, corn futures lost 10 to 12 cents and wheat futures were off 12 to 20 cents and all three classes made new contract lows.
The market tanked on fund selling and no threatening weather. In fact, more rain is forecast for the Eastern Corn Belt with moderate temperatures right at the critical pollination period.
Bryan Doherty, Total Farm Marketing, says funds have no reason to stop selling the markets and end users are just not stepping up to the plate and instead buying hand to mouth as they don’t have any fear from the supply side.
“The old is markets often accelerate as they try to reach a top or bottom and maybe that’s what we’re seeing here. Why that happens is because those selling in the futures market are making money and so its easy for them to use what I call the “house money” to sell more,” he says.
The charts are also beat up, making it difficult to attract buyers even though grains are at value levels.
So is this like 2014 all over again?
Doherty says, “Its very much like it and its not. So let’s remember 2014 was 10 years ago and cost of production is significantly different but when you overlay the charts its the same thing. The market started near $5 at the beginning of the year and just kept edging lower and edging lower. It got to the 4th of July weekend and then it just fell apart from there and got all the way down to $3.18 on the low before rebounding and getting back closer to $4 by December,” he explains.
He says the crop was really good that year over most of the Corn Belt but this year the crop doesn’t look as good from a yield perspective.
The wheat market still has report hangover with 100 million added bushels and fund selling.
Meanwhile, live cattle continue to consolidate despite their large discount to cash.
Doherty says, “At these high prices you aren’t going to develop new demand in the market and so I think that’s why they futures have failed to follow cash.”
