Grains are mostly lower early Thursday, with cattle and hogs mixed.
DuWayne Bosse of Bolt Marketing says the grain markets have been a bloodbath this week.
Corn saw more new contract lows in old and new crop corn this morning before trying to bounce but funds have been heavy sellers pushing their short position to near record levels for this time of year.
The fund selling pressure, according to Bosse, has been tied to the lack of a weather threat to the crop and the build in ending stocks from old crop to new crop.
However, between option expiration in the July contract and first notice day on June 30 there has also been a massive amount of liquidation and increased farmer selling as farmers have given up on an old crop corn rally.
Add to that Brazil’s record safrihna corn crop, which is now pegged at 123.2 MMT and Argentina offering the lowest prices in the world.
Soybeans have also moved below the key 100 and 200 day moving averages and are below price levels posted before the positive demand news on the blending levels.
New contract lows in soybean meal have been a drag on the market and the lack of a weather story.
So, are the corn and soybean markets getting close to a bottom?
For corn, the charts have taken out contract lows so Bosse went continuous charts to find the next support area. He says support on continuous chart comes in at $3.93 which is a gap on the weekly chart. Then final support at $3.61.
"$3.93 seems very possible. I don’t think we fall all the way to $3.61. The continuous chart will follow the July contract until it is off the board in a few weeks. Corn is finding a little support overnight from an extremely oversold condition. I think farmer selling has increased this week as well. A lot of give up sales on old crop corn. Hard not to be discouraged with the market trending sharply lower,” he says.
Soybeans should find support around $10.00 according to Bosse.
He thinks there will be some squaring ahead of USDA reports and end of month and quarter, plus we are getting close to some signficant lows in beans.
Wheat futures have also taken out the June lows on hedge pressure, despite the slow harvest pace and disease issues with the U.S. crop due to too much rain. However, Bosse says the China and Russian crop size is also inching up which may be a factor.
The market is also gearing up for the USDA Reports on Monday but trade guesses are close to the March acreage intensions, so Bosse says there could be some surprises in that report.
He’s also watching the Quarterly Stocks figures on corn closely due to the way the July contract has been pressured and the unwinding of Jul/Dec spreads.
Cattle futures have been two sided early on Thursday awaiting this week’s cash for direction but the huge discount the futures are holding to cash should keep the markets supported according to Bosse.
Lean hog futures are mixed as the market gears up for the USDA Hogs and Pigs Report this afternoon with expectations of a slightly lower inventory.
