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Closing Comments

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Closing Comments

Corn closed at 3 ½ week highs on continued technical buying and spill-over from the return of strength to the soybean market. While the national average for corn planting is above the five year average, key states such as Indiana, Ohio, Michigan and Nebraska continue to lag – presenting the ongoing opportunity for acreage switching to soybeans.  News out of Brazil noted that in parts, crop losses are bad enough in their second crop corn that producers will need to negotiate forward sales contracts. A farm group in the Mato Grosso region estimates 63 percent of the crop is forward contracted. Today’s July close was firmly above the resistance level that found sellers at the end of April. The market will be watching how it can hold on to strength at the psychological 4.00 mark as well as the swing high of 407 ¼. Watch for upside resistance in the 4.15-4.20 zone.

Front month Soybeans traded at their highest level since November of 2014 today (see chart below) on continued strength in the soymeal market providing ongoing support to soybeans as well as ongoing support in the energy market. Money flow into commodity ownership continues to add to the ‘risk-on’ ownership mindset which has led funds to build and defend the second longest net position on record.

Wheat closed higher as the Chicago contract led the way again on short covering and speculative buying as the trade monitors excessive rains in the soft wheat production areas and news out of Germany that farmers have planted less wheat than anticipated. Europe’s Matif wheat contract rallied back to challenge the recent swing high of April 28th.  The Chicago weekly continuation contract has left a gap on the chart below this week’s bar on the rollover to the July front month. The weekly continuation – if closed here – would be the highest weekly close since December.

Cattle and feeders higher on improving packer margins and the best wholesale beef prices since late-April. Traders continue to roll out of front month positions, adding to the bear spread price pressure. Feeder cattle continued higher despite the prospect of higher priced corn feed costs.

Hogs finished mixed but generally supported on good packer profit margins and seasonal gains in wholesale pork keeping cash hogs supported. The lean index traded to its highest level, 76.72 cents, since September. Peoria hogs traded steady at $47.

 

Continuation daily soybeans traded at their highest level since the fall of 2014 today as the July contract matched the swing high from the November high of the November 2014 contract which was the front month contract at that time:

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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