Grains ended mixed on Friday with cattle and hogs mostly higher.
Corn Ends Flat Friday
Corn futures gave up early gains on Friday to end steady with Dec at $4.62.
DuWayne Bosse with Bolt Marketing says corn bounced off of support at the 50-day moving average on short covering but could not get above resistance either so it ended up flat on the day.
He says, “If you look at like the RSIs, we were pretty grossly oversold this market this week. We’ve been trending lower, good weather forecasts, good extended forecasts with some rains in Iowa. So I think we just got oversold and just, you know, we bounced early this morning, but I don’t like the way that market closed.”
Bosse thinks the market is still in a down trend with no natural buyer in the market.
“Funds are sellers. They’re still along 100,000 contracts probably. We used to got farmers in the Western Corn Belt dumping old crop, so they’re not a buyer either. So it seems like that’s the path of least resistance right now.”
Corn Gears up for WASDE
The market was also seeing some positioning ahead of the WASDE with many private estimates showing higher than USDA’s 183 bu. per acre trend line yield.
The market has been holding the 50-day moving average but with a bearish report that will be hard to hold.
“What is the yield is 184 plus,” he says, “The market is not going to like that. “I’m still a little bit concerned that this market has to go back down, test the old lows. And then maybe we can transition and talk about the solid export demand, things like that.”
He is also concerned about higher acreage in the report.
“I’m kind of one of those guys thinking that the acres are a little too low, actually. I think corn acres are higher than the trade thinks right now, despite all the high fertilizer costs this spring.”
Acreage the Wild Card
FSA certified acres will be released the morning of the report and could be the big wild card according to Bosse.
“Everyone talks about the yield and probably too much. Now, yeah, yield will change supply, but you really want to change supply, increase or decrease acres. And I don’t know, we’re in the fringe areas up here. You go into North Dakota and man, there’s more corn planted than I’ve ever seen. And that justifies to what everyone was telling us this winter, right? They said that they can yield up in corn to profit. So they followed through and planted more corn,” he says.
But how much adjustment is he expecting? “About 1.5 million higher corn average is what I’ve got in there right now, but it wouldn’t shock me if it was 2.2 or something. But that means, you know, maybe lose a little bit of soybean acres and more spring wheat acres too.”
Soybean Yield at 53
Most of the yield estimates have been right about the 53 bu. per acre trend line yield USDA provided.
The market isn’t expecting a big adjustment from USDA because it is too early and neither is Bosse.
“I’m bumping it just a little bit higher, but that’s because I’m looking at the extended yield weather forecast. And just it looks to me like more of a northwesterly flow, cooler temps. And you kind of see that in the 6 to 10 and 8 to 14 day. And if that does materialize, I think that yield could bump up to 55 pretty easy,” he says.
However, it is likely USDA will stay at 53 bu. since August is the critical time for soybeans.
Export Business
Corn and soybeans saw early support from a sale of 8.7 million bu. of new crop soybeans to China and Mexico also bought 11.3 million bu. of corn with most of it for 2027-28.
That demand continues to shore up the market and Bosse sees China continuing to buy more on the dips.
“It’ll be really interesting to see after President Xi visits here. I think China is going to continue to buy that about one million metric ton each week until that visit. But we still China still has that 10% tariff on our soybeans. So all the beans that are being bought right now is for government reserves. And if you notice, they’re auctioning their government reserves there domestically to make room for these beans. You really can’t get me that bullish until we lose that 10% tariff China has on us. And it’s just regular crush plants in China that are buying our beans,” he explains.
However, he says the market is more focused on supply than demand right now.
China Soybean Total
Bosse says China has bought about 1/5th of the 25 million metric tons they’ve committed to.
“Around that five to six million metric ton levels. If China does 25 million metric ton it doesn’t have to mean our soybean market actually has to climb up a lot because I’ve already seen Brazil is exporting a lot of their soybeans to buyers other than China right now. So it’s kind of a shell game. If politics do make China buy all the beans from us, then we’ll lose export business elsewhere too.”
Export Changes?
Will USDA made any export changes in the August WASDE? For corn old crop exports are already 100 million bushels above USDA’s forecast.
Bosse says for old crop corn, even with record exports, he is seeing grain terminals full where he farms in Northeast South Dakota and farmers aren’t even done delivering old crop corn. So he thinks there could be a record amount of old crop corn bushels that get carried into new crop that doesn’t show up until the quarterly stock report in December.
Plus, does USDA adjust soybean exports with China starting to buy?
He says for soybeans he doesn’t see much change. “They could tweak old crop a little bit, but I don’t think they want to tweak it too much because honestly, like you and I have talked before, these S&D tables are not bearish. That ending stocks value anywhere in the 300 to me is fairly tight. You have a hiccup here and there, and we got a really bullish situation.”
Wheat Rallies on Black Sea Concerns
Wheat futures rallied on Friday with concerns about Black Sea exports. The Ukraine Ag Minister says corn exports could be cut by 30% and and wheat exports by more than half with their export terminals shut.
Still Bosse thinks the market is down playing the situation and still just chasing headlines and he’s been disappointed that wheat wasn’t able to rally more.
“It should be the first grain that kind of gets us out of the harvest lows. And Ukraine, Russia, the Black Sea right now, I mean it is a huge deal if they can only export, say, half of the wheat. That would be just huge. But the market just isn’t buying into it.”
He thinks the bears are concentrating on the fact that even if they can’t get wheat out of the Black Sea region the global wheat supplies haven’t changed and Ukraine is working on ways to get the product exported. Plus, the U.S. isn’t picking up any export business.
“Wheat exports are actually behind a year ago,” he adds.
The lower dollar may help the wheat market and it was down Friday with the poor Jobs report which showed a loss of 23,000 jobs. That is lessening the chance for an interest rate hike in September.
Cattle Futures Follow Cash
Live cattle futures were slightly lower for the week and stalled out on Thursday at the 50% retracement level.
The cash market was higher at $235 to $236 but that even failed to really rally the market about those resistance levels.
Is the market getting tired or will it get through those technical areas?
Bosse thinks cattle are just taking a healthy break especially with feeder cattle ending sharply higher Friday and September up $3.12 for the week.
“I think the market’s just fine. I think it’s building a nice, solid support here. You know, seasonal tendencies to go higher. The problem is the funds are still along a few contracts. And when you look and see the stock market equities making all-time highs, I think they basically kind of say, we can make more money somewhere else. So, they just exited.”
He points to the declining open interest as well as evidence the funds are liquidating.
Still, the futures are at a discount to the cash in both live and feeder cattle futures which should provide a floor for those contracts.
“You got September feeders about $10 under the cash index and I think the cash index is going to keep climbing here. So I would hope the feeders would follow here soon.”
So, he thinks the futures will eventually get through the 50% retracement level resistance on the charts.
Lean Hogs Bounce, But Look Weak
Lean hog futures were higher on Friday with some short covering heading into the weekend but had another lower weekly close in the October, which was down $2.62.
Bosse says he’s been disappointed in the hog market.
“We were at this mid-70 levels for Dec hogs for a long time. We finally got a nice spike, but prices really didn’t get high enough where
producers were that excited to hedge, and now we’re right back down to where we were. We’re just not exporting a lot of pork right now, and we need to do that. It’s 21% to 26% of our production gets exported. We’re just not seeing that right now. China’s demand is down. So just kind of a go -nowhere market,” he concludes.
