A market analyst believes Thursday?s pullback in the grain sector was healthy for the market.
One day after the USDA released the May WASDE Report, grain markets experienced a ?washout,? says Matt Bennett of AgMarket.Net. Although, he says the major correction was a good thing.
?We had a big selloff,? said Bennett. ?A lot of it had to do with the fact the report was maybe not quite as bullish as everyone was hoping for this week. At the same time, this market is overbought, it?s tired and a washout was expected.?
Buying came into the market Friday morning, which Bennett said was an impressive move. Now that we are post-WASDE, the focus will be on weather in the U.S.
?As of right now, the U.S. crop seems to be getting planted not near as fast as what we originally thought it might be, but regardless, I think we?re going to have a decent spring overall,? said Bennett. ?Now, it?s just going to be up to Mother Nature.?
Bennett notes the grain markets will be keeping a close eye on the struggling safrinha corn crop in South America as dryness and drought impacts major crop areas.
?They?ve had a real issue trying to get some rain in Mato Grosso and those areas,? said Bennett. ?You?ve got to assume their production is going to be lower. Given how much corn they put on the world market the last several years, that could be a significant factor affecting the market moving forward.?
Bennett advises farmers to run their numbers, look at what their break-evens are, where they can make money, and take advantage of a bounce back.
