3RD DAY OF GRAINS FALL OUT

Written By Sebastian Frost

MARKET UPDATE

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Overview

Grains continue to get absolutely hammered for the 3rd day in a row.

Why have we been hit so hard this week?

The first reason is simply a lack of bullish news. Especially in soybeans & wheat.

We have the US dollar continuing to surge. As it rallies to +1 year highs. Trading at it's highest level since October 2023.

This is bad for exports and makes us less competitive. Strength in the dollar effects all of the grains, but usually impacts the wheat market the most. Hence the recent heavy sell off.

We also have uncertainties surrounding what a Trump Presidency will mean.

How will it effect our relationship with China? Will they support bio fuel? Will we get a trade war and tariffs?

Altough bean demand has stagnated here, corn demand remains very solid. As we continue to see daily flash sales.

The market seems more concerned about "future demand". Meaning they are wondering how much of this demand was front ran in anticipation of a Trump presidency and how much of this demand will stay.

We also have South America weather still looking ideal. With all signs pointing to record bean production if weather remains normal.

Next 2 Weeks

Past 30 Days

Then the wheat market is also seeing pressure due to the rain in the US plains.

We have received great rain with more on the way. So those drought concerns are going away as winter wheat crop ratings have been seeing a big improvement.

Next 2 Weeks

Past 30 Days

In my opinion, the biggest reason for the wheat sell off besides the dollar rally & rain in the plains was simply technical selling.

We broke that key $5.65 support level I had mentioning for a very long time. Once that broke, it opened the flood gates lower and the selling accelerated. As I had been saying there is very little support beneath that level if it broke.

Soybean meal prices have dropped to some historically low levels as the entire soy complex falls apart.

So as a livestock producer it makes sense to be an aggressive buyer here.

On a positive note.. corn ethanol production came in at a RECORD.

As ethanol production reached 1,113 thousand barrels per day.

This is such a friendly potential factor given that currently the USDA projects ethanol production to be worse than last year.. but we are well ahead.

This alone could very well be enough to add anywhere around +100 million bushels of corn demand on the balance sheet if pace stays this way.

Chart from GrainStats


Today's Main Takeaways

Corn

Corn sees it's largest daily loss in a month. Following the rest of the markets lower.

Unlike soybeans & wheat who really do not have much of a bull story here at least short term, corn does.

It has a very real…………………

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Past Sell or Protection Signals

We recently incorporated these. Here are our past signals.

Oct 2nd: 🌾 

Wheat sell signal at $6.12 target

CLICK HERE TO VIEW
 

Sep 30th: 🌽 

Corn protection signal at $4.23-26

CLICK HERE TO VIEW
 

Sep 27th: 🌱 

Soybean sell & protection signal at $10.65

CLICK HERE TO VIEW
 

Sep 13th: 🌾 

Wheat sell signal at $5.98

CLICK HERE TO VIEW
 

May 22nd: 🌾 

Wheat sell signal when wheat traded +$7.00

CLICK HERE TO VIEW

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Sebastian Frost
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GRAINS CONTINUE WEAKNESS & DOLLAR CONTINUES RALLY