It was a down and dirty overnight session as most grains and commodities pushed lower on very little news. Both the corn and soybean markets benefited greatly over the summer from speculative longs entering the market and driving prices higher. Now you can routinely check the markets on a random morning and find them double digits lower on no news as these same spec longs decide to take profits. Because of this, the charts do not look good on soybeans and any bounces in the market are quickly being sold.
In both corn and soybeans there are buyers under the market: the commercials/end users because these prices are attractive and profitable. China was in over the weekend for example, rumored to be purchasing additional cargoes of US soybeans.
You may ask yourself, if commercials are out there bottom-picking and locking in margins, why aren’t the prices going higher? I guess the simple answer to that would be because they are buying/crushing the physical commodity, not necessarily the futures – evidence of this should be found in subsequent weekly export sales reports and quarterly stocks reports. It is important to note that even if we get proof from the USDA that corn/soybeans are slowly disappearing -- this doesn’t guarantee futures prices will blindly run higher. Today even when the flat price is working lower you can see the tightness of grains in spreads (inversed) and basis (historically firm). If inverted markets and basis continue to do the job in getting grain to market, the futures don’t necessarily have to follow.
Currently
Corn is down 8 to 12 cents
Soybeans are down 20 to 30 cents
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