Corn and soybeans were lower again Wednesday with wheat mixed. Cattle soared to new highs with hogs mostly lower.
Contract Lows in Corn...Again
Sam Hudson with Corn Belt Marketing says corn made contract lows again Wednesday as funds continue to sell on record yield estimates from private firms.
He thinks the market has already factored in a 184 to 186 yield but estimates continue to climb.
“It seems like at this point it’s a race to 190 and you almost wonder by the time you get to October and actually put these combines in the field if we have to walk any of that back again.”
However, he added that USDA will not go that high on yield in the August WASDE.
“I am one to think that they’ll probably stair step it as you get into August and then September. If they go too far, they don’t want to get in a situation where they walk that back too far. And that’s exactly what happened last year,” he explains.
At least December corn was able to close off the lows and back above the $4 level.
However, it may have been a short term victory as Hudson thinks it’s just a matter of time before that support is breached.
It’s Not Just About Record Yields
Hudson says the pressure is also coming from seasonal weakness which is typical in August and an increase in farmer selling.
Farmers have old crop bushels to sell to make room for the new crop and ahead of first notice day on September contracts.....and the market knows it.
He advises producers that still have old crop bushels in storage to make sales.
“For the old crop, I mean, you just got to cut ties with that, wherever it’s at,” he says.
Soybeans Fall on Lack of China Demand and Lower Bean Oil
Soybeans started the session higher on weather concerns, the rally in bean oil and crude oil, plus some hope about China with President Trump saying a “deal is close”.
But deal on what? Not a trade framework but an extension of the tariff truce that is set to expire on Aug. 12?
Hudson says the market is becoming weary of this talk especially with China stalling purchases of U.S. soybeans and instead buying higher priced South American soybeans and meal.
“They will have to come to the market for U.S. soybeans eventually but right now they’re using it as leverage,” he says.
Meanwhile, Hudson says basis has widened for soybeans and corn.
Wheat Tries to Bounce But Can It Bottom if Corn Doesn’t?
Winter wheat contracts were slightly higher seeing some short covering or a technical bounce off fresh contract lows but it may have also received some help from a weaker dollar.
Hudson says that market will have a difficult time getting any traction though until corn bottoms, despite fairly strong export demand.
Cattle Soar to New Highs With No Signs of Stopping?
Live and feeder cattle futures saw profit taking on the opening but muscled back into new contract and all-time highs in the nearby contracts on the close.
The market continues to be bought by the funds on the breaks and the market also got a push from USDA reporting boxed beef was up $4.04 to $4.87 at noon.
The increased volatility, according to Hudson, can often signal a top is near but it may not prove out in this type of a market unless cash trade breaks.
The futures are at a big discount except for the August contracts which have been chasing record cash prices from last week.
Lean Hogs Consolidate Despite Higher Cattle
The lean hog futures have benefited from the rally in cattle but the deferred contracts were unable to follow cattle after hitting chart resistance.
