Markets were mixed Tuesday morning ahead of the U.S. Department of Agriculture’s quarterly grain stocks and acreage reports, with one market analyst saying the reports are more likely to trigger short-term volatility than change the broader market outlook.
Barchart Senior Analyst Darin Newsom said the reports are unlikely to provide new fundamental information but could prompt sharp price swings as automated trading systems react to the data.
“Basically, there’s nothing informative that’s going to come with these,” Newsom said. “The fundamentals of the market won’t change, but the knee-jerk reaction … that’s what we’re watching.”
Newsom said acreage estimates for corn and soybeans will be the primary focus. He noted previous USDA acreage reports have remained consistent with last year’s corn plantings and said it will be interesting to see whether that pattern continues.
“We all know that U.S. producers like to plant corn,” he said. “Some sort of bearish surprise would be interesting to see in corn if those numbers come in larger than expected.”
On the livestock side, Newsom said traders are watching for cash cattle trade to develop during the shortened holiday week. He also pointed to June consumer confidence data, which came in below expectations, as a potential concern for the cattle market.
“If consumers are losing confidence in the economy, are we approaching the tipping point for U.S. beef and cattle?” Newsom said. “Consumers have continued to buy beef at these price levels. If that starts to go away, how long can the cattle market stay up here?”
At midmorning, December corn futures were down 2 cents, November soybeans had fallen 9 3/4 cents and September Chicago wheat was down 3/4 cent. August live cattle futures were down $1.225, August feeder cattle had declined $3.075 and August lean hog futures were up 87.5 cents.