Grains see additional pressure Wednesday morning, with livestock mostly higher and record highs in cattle.
Grain Markets Comfortable With Ample Supplies
Darin Newsom, Senior Market Analyst with Barchart, Inc. says grains continue to see non-commercial or fund selling pressure pushing corn into new contract lows again.
He says the markets are becoming more and more comfortable about ample supplies for this coming marketing year as witnessed in the weaker basis levels.
Crop ratings for corn are historically high and the trade is pricing in a larger yield.
Demand Is Also In Question
However, Newsom says the factor not being talked about is demand is starting to fall.
Case in point the export shipments for corn since Nov. 1 have fallen 400 million bu. from their normal pace, while since the last week of October soybean shipments have slowed more than 200 million bu. off their average pace.
“It coincides with the results of the 2024 election and the fear of the tariff war,” he explains.
That suggests the strong export pace before November was front loading by export customers to avert higher prices from imposed tariffs.
Newsom says since that time the U.S. has not sold one bushel of new crop soybeans to China and in fact, market share to Brazil has gone up 56% with massive purchases from Beijing.
Trade Frameworks Won’t Help Demand
The promise of improved demand from trade deals is also being faded by the market according to Newsom.
“Because the deals that have been struck so far are not really deals but just frameworks and the market senses this won’t translate into near term demand to over come the large U.S. crops,” he explains.
Commercials Holding More 2024 Inventory
More old crop bushels are also in commercial hands this year versus in on-farm storage as witnessed in the recent USDA Quarterly Grain Stocks Report.
Is There Anything That Can Change Trend in These Bear Markets for Grains?
Newsom says right now he doesn’t see any fundamental reason for fund traders to change course as they have pushed to over 200,000 contracts short in corn and he thinks they may continue to liquidate their slightly long position in soybeans.
He points out weather has been near ideal and South American production was record large for both corn and soybeans and that is also pressuring grain futures.
