Grains started higher on Friday morning and are trying to hold gains. Cattle are seeing pressure, with hogs strong.
Corn Sees Technical Strength
Randy Martinson, Martinson Ag, says corn is seeing follow through technical buying after holding support at the 50-day moving average on the December contract.
Corn is working on its third higher weekly close, which continues to help confirm the fall low set on August 12.
New Crop Corn Exports Strong
New crop corn exports were strong at 83.3 million bu. and even with net cancellations of 11.1 million bu. for old crop the total sales for the old crop marketing year stand at 2.69 billion bu. up 27% from last year.
Ethanol production was down slightly last week but corn got a demand boost from news that California had passed legislation on E15 sales, the last state to join the party.
Soybeans Struggle to Hold Early Gains
Soybeans started out higher on Friday morning trying to extend gains after holding key support on the November at the 200-day moving average.
However, that market continues to struggle with the lack of new crop China export business.
Weekly exports showed net cancellations of .9 million bu. old crop but were strong at 30.1 million bu. new crop. The problem is new crop exports are only totaling 295. 6 million bu. and are down 32% from a year ago.
The bigger issue is China has still not bought any new crop soybeans from the U.S.
Is China Buying as Unknown Destinations?
Flash sales totaling 12 million bu. of new crop soybeans were announced to unknown destinations Friday morning.
That brings the total new crop sales to unknown to 132.6 million bu.
So, could China be buying under unknown destinations?
Martinson says it is possible some of that total could be China business and they have been known in the past to buy soybeans under the radar to keep prices down.
“Last year at this time China had 250 million bu. of soybeans on the books so this is their prime window for purchases.”
Wheat Still Trying to Bottom
Wheat futures made new contract lows in all three classes on Thursday and are trying to bounce on Friday morning on technical buying and end of week short covering.
Wheat is also getting some help from a slightly higher corn market but the inability of the market to bottom has been frustrating says Martinson.
Weekly export sales were disappointing at only 11.5 million bu. but new crop sales so far still total 456 million bu. which is up 22% from last year.
So if demand isn’t the problem with the wheat market what is?
Martinson says many Northern Hemisphere countries are harvesting and finding bigger than expected crops and so the added bushels from major exporters is not helping the market.
Plus, Matif wheat is hitting new contract lows.
Cattle Working on a Lower Weekly Close
Live and feeder cattle futures are lower to start Friday seeing continued profit taking.
However, lower cash trade in Northern feeding areas at mostly $242, down $3, was also contributing to the weakness.
A light trade was reported on both Wednesday and Thursday, with Southern live deals at mostly $242 with a few up to $243, steady to $1 higher than the prior week’s weighted averages. Northern dressed business was marked at mostly $383, $2 lower than the previous week’s weighted average basis Nebraska.
He says futures are working on lower weekly closes which may confirm an intermediate top, especially as seasonally the market starts to see lower demand in September and building cattle numbers.
“This would be the first lower weekly close in live cattle in 11 weeks and the first for feeder cattle in 7 weeks,” he says.
