Grain markets continue searching for direction as corn pulls back from recent highs, soybeans remain stuck in a trading range and wheat faces seasonal harvest pressure.
Speaking on this week’s Market Journal, Senior Barchart Analyst Darin Newsom said the overall tone across the grain complex remains cautious, with few fundamental reasons for investors to become aggressively bullish.
“I would probably phrase it as a little bit bearish,” Newsom said. “There really isn’t any reason to be bullish.”
Newsom noted investment money has largely moved away from grain markets as the industry transitions into the summer growing season. He said current market fundamentals, including basis levels and futures spreads, are not providing strong support for higher prices.
In corn, Newsom pointed to remaining old-crop supplies moving into the marketplace ahead of harvest and favorable weather conditions across much of the Midwest and Plains.
“What we’ve seen is weather patterns turn wetter over the Plains and Midwest over the last couple weeks,” he said. “There’s still been plenty of rain and still plenty of rain in the forecast.”
Soybeans continue to face a different challenge: demand.
Newsom said export demand remains limited and much of the market’s optimism has been tied to expectations for increased domestic crush demand tied to soybean oil production.
“Soybeans have been living on nothing but hope,” he said.
Meanwhile, wheat markets are seeing a combination of seasonal harvest pressure and shifting speculative activity. Newsom noted hard red winter wheat yields appear smaller in portions of the Southern Plains, but overall supplies are still expected to meet demand.
Looking ahead to June and July, Newsom said a sustained weather rally appears unlikely unless crop conditions deteriorate significantly.
“As I look ahead into June and July, really there’s nothing that stands out to me right now that’s saying these crops are going to come under stress,” he said.
For producers, Newsom encouraged a disciplined approach to marketing in a market lacking a clear trend.
“When we get a two- to three-day pop, go ahead and sell it,” he said. “Sell a little bit, not all of it.”
Watch the full interview with Darin Newsom in the video below