Another Day of Rough Sledding for Agricultural Markets

Cattle & Beef - Cattle

Good afternoon. This is Oliver Sloup with Blue Line futures. Today is Wednesday, July 10. And it was another rough day of sledding for the agricultural markets. Before we get into today's prices, I do want to remind you, if you have not signed up for a free trial of our daily Commodity Research, head over to Blue Line Hit that Free Trial button. From there you can select the markets that interest you most whether that be grains, livestock, metals, energies, etc, we've got a great team in house that puts out a lot of great content on a daily basis. Also want to remind you that we will be going over the charts on our blue line edge trading platform, which is free and complimentary to trading brokerage clients. Now that I got those plugs out of the way, we can go ahead and get into today's prices of corn, it was for the most part mixed, which I guess is a little bit of a silver lining September futures 123 quarters since higher and deep down one and a quarter. But you know, really after such rough sledding, especially on Monday's trade, you really would have liked to see a better recovery than what we've gotten over the last couple of days. And the fact that we haven't makes me a little bit concerned that we haven't gotten that peak panic capitulation move that we may need to see to get the short term low in the market. Now, you know, with that said the overall sentiment is about as bearish as it's been. And you know, it was very reminiscent of what we saw at the end of February when we were able to carve out a short term low without that peak panic type of trade. So I guess potentially, there's a little bit of a silver lining there, but probably a reach. So my concern is that you don't really get that peak panic capitulation. Trade to form a short short term low until you see December trade below $4. Now, I hope that doesn't happen. But again, that's kind of my my fear here going through the rest of this week and into Friday's USDA report. Now over on the soybean chart, just an ugly week, lower for the third straight day extending the losses for the week to about 65 cents. And today's price action sharply lower, despite private exporters reporting 132,000 metric tons, or about 4.8 million bushels of soybeans for delivery to China for the 2024 2025 marketing year, which is the first new crop being sailed to China on the books. So you would have thought and that would maybe start to spur a little bit of optimism in the futures market signaling that potentially low prices are doing their job and curing low prices, you can see that maybe taking place on a global scale where the US beans are starting to become much more competitive. But as far as the futures board goes, not so fast. My friend is Lee Corso would say so, you know, I'm hopeful we can carve out a low here very soon and maybe see some demand pick up. But is the demand gonna pick up in a meaningful way ahead of the election? I think that's the big question. And that big dark cloud that's really been lingering and hanging over some of these agricultural markets. So I don't know that I'd be holding my breath for that just yet. Now moving over to the wheat market. We got September, Chicago, wheat futures pulled up here and lower in today's trade, with prices trading back down near the low end of the range going all the way back to March, which was kind of an area where the markets awesome value back then I will again to be determined looking at the weekly export sales data over the last couple of weeks, you can make the argument that yes, it is a value zone. And we can potentially hold strong here from a risk reward trade. I like the wheat market to the upside from here. But it is a counter trend trade, right, the recent trend has been lower. So if you're planning for a reversal, and I guess trying to pick a low, which isn't really a sage advice, options can be a great tool to look to gain some of that exposure with limited risk. So that'd be something I'd be looking at in that market.
Now moving over to cattle futures, we've got December live cattle pulled up here and you can see we've been able to hold trendline support and you can see it in the feeder cattle market as well. Right on the edge though breaking close below there and boy tell you what I'd be a little bit more concerned that we could see additional technical selling in the cattle markets really been one of those ones where I feel like it's had reason to rally but really hasn't, you know, been able to feed on itself into those fundamental headlines. So the fact that we aren't able to rally on what is supposedly good news, especially with the cash market is a little bit of a fundamental rejection in our eyes and is a little bit of a caution flag. And again, it kind of goes with the overall theme in the agricultural space. It's the funds want to be long into the election. New funds want to be long if we start to see slower economic data, which is ultimately kind of the Feds goal at this point to help slow down the economy and I'm not so sure that funds want to do that especially looking into the end of this year and into next year once we get past this peak summer demand season. So that's something to keep an eye on on cattle If you're looking for downside exposure, or looking for some hedge protection, and again, I think options are a great way to do that, while keeping the upside open for yourself. Now moving over to the lean hog market, just an ugly day again, the agricultural markets just can't catch a break. When in hogs got walloped, with August settling limit down now because it was the only contract that was limit down, the daily limit remains intact for Thursday's trade at 375. December lean hogs, they looked even uglier. So again, a lot of concerns there in some of these agricultural markets, I think with a looming election, potential economy, slowing down and just keeping funds really on the sidelines not overly aggressive in some of these markets. Now, where's the silver lining? Well, I think you'd have to go look at some of the outside markets, the precious metals have been something that's been on our radar for a while. Here, we've got silver holding up relatively well over the last couple of weeks. After consolidating, we do have CPI tomorrow and PPI on Friday. And potentially these are some of the reports that can get us out above technical resistance. Here we have the August gold contract hold up, we're just knocking on the door 2400 bucks, as you can see here, this was a break down point on May 23. And then it became resistance if we can get out above that psychologically significant $2,400 level, I really think it could spur some of that FOMO trade or the fear of missing out and propel some of these markets higher including silver, which is arguably probably a higher beta play and as well as other markets like copper. So those are a few things we're looking at going into these next couple of days with big data out. If you've got any questions at all don't hesitate to reach out to our trade desk we are ready, willing and able to help if you have any questions with regards to the agricultural space feel free to give me a shout or shoot me an email my email Oliver at Blue Line Now remember trading futures and options may substantially risk of loss may not be suitable for all investors.

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On the date of publication, Oliver Sloup did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.