Grains had an ugly close on Friday and posted lower weekly closes despite strong weekly exports and more flash sales of corn and soybeans.
Tommy Grisafi with Advance Trading says corn and soybeans started with some strength Friday but selling pushed prices lower into the close.
Selling accelerated in the wheat market with double digit losses as he says Russia flip flopped on their wheat export policy and suggested price floor.
Pressure came from hedge selling ahead of another big harvest weekend and as many farmers are reporting strong corn yields which are weighing on the market.
He says the grain markets continue to remove weather premium with more forecasted precipitation in South America and rains that fell in wheat areas of Southern Russia on Thursday.
In fact, November soybeans have lost nearly $1 from the September highs and are just a 15 cents off the contract lows.
Grisafi says the market is also trading the stronger U.S. dollar and growing fears about possible increased tariffs on China if Donald Trump is re-elected.
On Friday, the Chinese government announced another round of stimulus and traders are starting to become concerned the economic problems in the country are much worse than reported.
After lower weekly closes the key is will the managed money traders pile on to sell more next week and push corn and soybeans back into contract lows at $3.85 and $9.55 respectively?
Or will the lower prices uncover more demand that ultimately provides support?
“The good news is these big bushels are starting to be hit with demand,” he says.
However, Grisafi thinks the funds have already started to rebuild shorts in the grain markets.
Cattle futures ended higher on Friday supported by steady to $1 higher cash trade but were still lower for the week.
Will the market be able to retest the recent highs?
Grisafi says the fundamentals, including tight supplies, would suggest it is possible.
