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Wheat prices under pressure at market close | Wednesday, July 6, 2022

The collapse in the soybean oil market along with massive fund selling pressured the grain markets early today. The soybean market turned up first and then corn followed as end user buying came in late in the day.  The fear of a global economic slowdown, along with non-threatening weather is keeping the pressure on wheat prices. 

July corn had a 35 cent trading range and closed up 8 cents. December corn closed 6 cents higher. July soybean futures closed up 5 cents, and November soybean closed 6 cents higher. Wheat futures closed 2 to 12 cents lower. 

Soybean oil prices are down over 35% from the highs in May, and CBOT wheat prices are down 43%. It is amazing that wheat prices are lower now than when Russia invaded Ukraine. The inflation hedgers who bought at the wrong time are bailing out with large losses. 

In outside markets, the U.S. dollar is higher with the cash index now above 107. Crude oil is down 97 cents a barrel and is $3 off the early day low. Traders liked what the Federal committee meeting minutes had to say today. After the release of the minutes, the stock market turned higher. At this hour, the Dow is up 122 points.  

The livestock markets closed higher. August hogs closed up $3.25 at $109.20. August cattle closed up $1.57 at $134.50, and August feeders closed up 60 cents at $173.30.

Fund selling continues to pressure grain and energy markets at midday: 11 a.m.

I have noted that funds often sell in three- or five-day increments. Today marks day three. Odds favor a short-term bottom by Friday. The wheat market that was the strongest on the way up is now pulling the all grain markets lower.  

At this hour, July corn is currently down 6 cents. December corn is down 9 cents. July soybean futures are currently down 7 cents. November soybeans are 8 cents lower. Wheat futures are lower, down 12 to 21 cents per bushel.   

The USDA Export sales report will be released on Friday, and I will be watching to see if the lower prices in the grain markets bring in any buying. The soybean export sales report may show a large negative number for old crop because of soybean purchase cancellations by China. It appears China either moved the orders to South America or to new crop. 

In the livestock market, August hogs are up $3.80 at $109.80. August cattle are up $1.27 at $134.20, and August feeders are up 10 cents at $172.80. 

In outside markets, crude oil is now over $3 per barrel after trading higher in the overnight markets. The U.S. stock market is lower again but holding key chart support levels – so far. The U.S. dollar index is trading higher again at new 20-year highs.

Grain markets rally back: 8:50 a.m.

The grain markets are rallying back today after a lower start last night. All asset classes have been hit hard and the grain markets were pulled lower in the meltdown. Last night wheat turned higher first, and then the corn and soybean markets eventually moved higher. 

July corn is up 12 cents. December corn is up 4 cents. July soybeans are trading 11 cents higher, and November soybeans are up 12 cents. Wheat futures are 7 to 20 cents higher. 

Yesterday's USDA Crop progress report showed corn ratings dropping by 3% to 64% good/excellent/ Soybean ratings were down 2% to just 63% good/excellent. The eastern Corn Belt and Delta regions took a big hit last week. 
It feels like a turn around. Wednesday's prices are oversold, and if the U.S. stock market can stabilize and turn higher, look for the grain markets to post a short-term low. 

On the Dalian Commodity Exchange in China, corn and soybean futures are lower. On the Matif exchange in Europe, wheat futures are 18 cents a bushel lower at $11.12.

In early trade, livestock futures are higher. 

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About the Author: Al Kluis has been a commodity advisor and broker since 1976. Kluis is an introducing broker with Wedbush Futures and writes a column, Your Profit, which appears in every issue of Successful Farming magazine. Kluis has published two books on commodities trading and is commonly quoted in major publications including the Wall Street Journal. He is also a featured speaker at commodity conferences nationwide. Kluis is a frequent market analyst for the Linder Farm Radio News Network. A Minnesota farm boy, Kluis was awarded his degree in ag economics from the University of Minnesota in 1974, after which he was executive director of the Minnesota Soybean Association before entering the markets full-time. His family still farms in southwest Minnesota, and Kluis enjoys helping with fieldwork when the markets allow.

Editor’s Note: The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance – whether actual or indicated by simulated historical tests of strategies – is not indicative of future results. Trading advice reflects good-faith judgment at a specific time and is subject to change without notice. There is no guarantee the advice given will result in profitable trades.

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