Friday’s lower markets closing looked like a typical Friday profit-taking session. But Tuesday, after a three-day weekend, corn and soybean futures remained sharply lower. Those losses were repeated in the overnight session; soybean contracts at one time were down about 80 cents per bushel compared to late last week.
Every time prices have slipped in the last few months, especially in the case of soybeans, breaks have quickly been bought and prices have moved higher. What about this break? Is it temporary, or is it a sign that the ride is over?
“Wheat just tried to rally. We’ve seen corn attempt to rally. We’ve seen soybeans attempt to rally,” said AgriVisor’s Karl Setzer during Tuesday’s activity. “There’s just not enough buying interest to get this market higher. It goes back to the thing we’ve discussed: funds tend to work in three-day windows. So we had selling Friday. We had selling yesterday. We have profit-taking again today. The question is: Do we wait until tomorrow to see buying, or is this really a turnaround?”
Setzer says that larger Brazilian crop estimates have caused some market pressure. But those increased estimates are certainly not enough to assuage rationing concerns that have led to these higher prices.
“The market needed a correction. It’s incredibly overbought. Some back-and-fill action is good, but we need to make sure that we hold the lows,” said Curt Kimmel of Bates Commodities in Normal. “The key is probably Friday’s close. With the market action that we saw this week, if we close below last Friday’s close, that’s going to be a weekly reversal down, and that might indicate that last week’s high may be enough short term. But the fundamental guys, even the technical guys are remaining somewhat optimistic that the highs are not in yet, and we’ve still got some upside movement to take place. Plus, we don’t have the new crop acreage figured out, so there’s still a lot of market in front of us yet.”