Early Rallies Gone with the Wind After USDA’s Report
On Friday, USDA released their September Quarterly Grain Stocks Report. The report was undoubtedly bearish for the markets, sending corn and soybeans both sharply lower. Was the price loss merited? Brian Splitt a senior broker at Allendale, Inc. joined Chip Flory on AgriTalk After the Bell to dissect the numbers.
“It's hard to equate a certain [number] of bushels to a certain movement and price,” he told Flory. USDA added 130 million bushels to the corn that will be on-hand at the start of the 2018/19 marketing year and corn prices dropped 8 cents.
According to Splitt, a lot of the market losses were due to the rallies that lead up to the report.
“We tried to get some momentum going and you know if you're looking at any of these charts, the corn market got up to the downtrend,” he explained. “So, the July 2019 contract for example, we've got a very clear downtrend from the high that was made in August to the high end mid-August and we went right smack dab to that trend line this morning, had an outside reversal lower and I think the major signal was as soon as the numbers came out and we took out yesterday and Wednesday’s lows that you know we knew it was going to be a negative reaction.”
Shortly after the report, the market tried to gain some but never got footing to go above yesterday’s lows.
“Then we just succumbed to the weakness and made new lows after that,” he said.