Every time the feedlot complex gets caught holding cattle, the problem is eventually corrected by cutting back on placements and pushing feeder cattle prices down. Since this scenario started to develop, I have been suggesting holding your short positions in fall feeder cattle and that is certainly the advice for this week. We are seeing a nice rally in grains and oilseeds. The hot weather is hurting crop conditions and yield prospects in soybeans and that started the entire complex on a rally. I have been expecting for some time.
Corn is assured of a record crop, but corn prices move with soybeans and soybean meal prices.
Users of corn, wheat, and soybeans should have long hedges in place. Longer term, we may see higher prices in that contract but it is not likely to come on this rally. On the November soybeans, the next serious resistance is at the bottom of the chart gap left back on June 12. But I do see that potential if the weather stays hot and the rains do not come back at abundant levels. Parts of the Midwest and the Southeast are seeing some deterioration in yield expectations for soybeans.