Grain markets find themselves in a state of flux early on, with the stock market showing signs of upward movement as both attempt to rebound from the significant meltdown witnessed on Wednesday. Darin Newsom, the Senior Market Analyst at Barchart, highlights the efforts of soybeans to stage a so-called "dead cat bounce" after reaching new contract lows, accompanied by soy products. A confluence of factors has been exerting pressure on the market. These include the large South American crop and favorable weather conditions. Additionally, the collapse of the Brazilian Real has led to further lows in contracts against the U.S. dollar. However, Newsom believes that the primary culprit behind the market's downturn was the massive selling by farmers in anticipation of possible changes in trade policy in the early part of 2025.Can the Market Recover from the Lows?
Newsom remains hopeful. At four-year lows, he anticipates an increase in export demand. On Thursday morning, there was 8.3 million bu. of new business, along with decent weekly exports of 52.3 million bu. Corn also took a hit on Wednesday, breaching major support levels. Similar to soybeans, it initially tried to bounce back but was dragged down by wheat, which reached new contract lows. Wheat futures are experiencing both technical and commercial selling, according to Newsom. There is no clear indication of a bottom being reached yet, given the fears of sanctions being lifted on Russia in the new administration.Soybeans: The Efforts of a Dead Cat Bounce
Soybeans have been on a rollercoaster ride. After making new contract lows, they are now striving to stage a comeback. The combination of factors such as the large South American crop and the weakening Brazilian Real has put significant pressure on the market. However, Newsom's analysis suggests that there is potential for a recovery. The expected increase in export demand could provide a much-needed boost. Farmers' selling ahead of potential trade policy changes may have been a short-term setback, but it doesn't necessarily mean the end of the road for soybeans. There is still hope that the market will stabilize and regain its footing.Corn: Battling Through Support Breaches
Corn faced a major setback on Wednesday as it took out major support levels. Like soybeans, it initially showed signs of bouncing back early on. But the downward pressure from wheat and other factors dragged it down. The market is now in a state of uncertainty, with traders and analysts closely watching for any signs of a turnaround. Newsom's assessment indicates that while the current situation is challenging, there is still a possibility of recovery. The interplay between various factors such as export demand and global trade policies will play a crucial role in determining the future of corn prices.Wheat: Technical and Commercial Selling Woes
Wheat futures are facing a double whammy of technical and commercial selling. The fears of sanctions being lifted on Russia in the new administration have added to the uncertainty in the market. There is no clear indication of a bottom being reached yet, and traders are waiting for more clarity. The technical indicators suggest that the market is still in a downtrend, but there are also signs that a potential reversal could be on the horizon. Newsom's insights provide valuable perspective on the situation, helping traders make more informed decisions.Cattle Futures: Under Pressure and Uncertainty
Cattle futures are under significant pressure, with follow-through fund selling and positioning ahead of the Cattle on Feed Report. It appears that an intermediate top may have been reached, but it's difficult to determine if it's just fund profit-taking or a more significant trend reversal. Newsom's analysis suggests that the market has shown topping patterns in the past, only to rebound with higher cash prices. This adds an element of uncertainty to the current situation. Traders will need to closely monitor the market and the release of the Cattle on Feed Report to get a better understanding of the future direction of cattle futures.
