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Closing Comments

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Closing Comments

Corn

Dryer outlook and support from wheat and soybeans props up corn.

By midday, funds were reported to be buyers of 3,000 corn. The bears feel the funds are too long considering the global economy, slow start to the new crop export pace and global supply/demand issues, but for now they seem content to defend the long position.

US June DDG exports were a record 1.3 mmt. The market remains concerned though of China lowering their corn support prices, slowing US DDG imports.

Weekly US ethanol production was down from last week but is still above last year. Stocks were down from last week but also above last year.

Informa released their production estimate: Corn at 165.4 bu with production of 13.41 bil bu., Soybean yield at 45.4 bu and production of 3.789 bil bu. USDA for now is using 166.8 bu for corn and 46.0 bu for soybeans.

Today September closed up 4 at 3.72 ¾, December closed up 4 ¼ at 3.83 ¼.

Soybeans

Dry weather, disease concerns and strength in soymeal gives soy a second day of strength.

By midday, funds were reported to have bought 5,000 soybeans, 3,000 soymeal and sold 1,000 soyoil.

Main topic in soy production is on growing concern of Sudden Death Syndrome (several comments that “my beans look great from the road, but when I walk out in them I’m starting to see SDS showing up more than I expected.”) as well as dry weather concerns. This is today’s comment from CWG regarding soy development weather: “Many recently dry spots in the Midwest/C. Delta will see a chance for relief in the next week, but the southern shift in this week’s rain event could leave shallow-rooted fields in parts of central IL/central IN at a bit more risk to begin drying out.”

November soybeans closed up 11 at 9.53 ¼.

Wheat

Spring wheat struggles under hedge pressure but the complex closes green.

Informa estimates US 2015 wheat crop near 2,159 mil bu vs the USDA 2,148. Hard red 877 vs USDA 866, Soft red 389 vs 393, and Spring wheat 582 vs 573.

Slow news day in wheat. Some reports that while spring wheat yields are very good, the high expectations may not be getting met as harvest gets into full swing in the upper Midwest. In wheat especially often expectations and headlines become more important than fundamentals.

In the September contracts; Chicago closed upt 8 ½ at 5.02, KC up 4 ½ at 489 ½ and Minneapolis was up 1 ¾ at 5.15 ½.

Beef

Mixed trade in the beef complex with higher retail prices and potential for higher feed risk.

Packers opened with bids of $145 live in Kansas and the Panhandle. Asking prices remain $152 live. The choice cutout is up $1.84 at noon, with the select cutout up $0.93. There continues to be talk about the high prices at retail, particularly on steaks and hamburger, which do not reflect the recent declines in wholesale values.

As of this writing October lives are down 0.025 while September feeders are down 0.075.

Pork

Weaker tone as packers anticipate larger slaughter numbers.

Cash hog base bids are no better than steady today. While packer margins are good enough now, as slaughter builds during the next few weeks those margins are expected to shrink dramatically. Watch for a downtrend toward the fourth quarter.

As of this publication, August is down 1.150 while December is down 0.300.

Closing Market Snapshot

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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