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Closing Comments

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Closing Comments

 

Corn experienced more fund selling as the market was under pressure with no fresh news, -3 ¼ at 3.45 ½ (Dec). The charts are oversold technically, and the hope is that recovery is around the corner. Last year, the CBOT achieved its low on August 31st, when DP and/basis contract selling ended for old crop, according to AgResource. The EIA Ethanol report today showed production down -0.95% compared to last week but up 1.86% compared to last year. Ethanol stocks declined -0.96% from last week but are up 1.80% over last year. Corn used in ethanol production was pegged at 109.41 million bushels, helping corn to eclipse the USDA overall yearly estimate of 5.45 billion bushels by 0.03 bbu.

 

Soybeans were down again without new developments and with September futures’ First Notice Day tomorrow, –4 at 9.33 ¼ (Nov). The risk/reward for beans is likely 30-40 cents either direction. The market needs a bigger story, i.e. frost, that would have a measurable effect on yield in order to see a bigger rally. Crop ratings and weather are relatively benign and not providing any volatility. That being said, there is an outside chance of frost temps moving in to the upper Midwest in a week or 10 days that could provide a new story. The USDA reported a private sale of 131K MT of soybeans to China for 2017/18. Chinese demand has been good, especially the last week, as they have announced 877K MT of sales from the U.S.

 

Wheat had mixed results today: Minneapolis HRS -4 ½, Kansas City HRW +3 and Chicago SRW even (Dec). The sought after Egyptian tender yesterday saw the U.S. finish about $15 above the winning bid. The U.S. was closer to winning Egyptian business two weeks ago, but global wheat prices are falling, making the U.S. less competitive. Russia and Ukraine won the Egyptian bid, and their offers continue to just be out of grasp. Look for Stats Canada results tomorrow. This report is the result of farmer surveys conducted between July 19th and August 1st. Expectations are for a decline from last year’s 31.72 MMT all wheat production to 26.2 MMT, and for Durum wheat to be at 4.90 MMT vs. 7.76 MMT last year.

 

Live Cattle rebounded from a poor start to finish positive, +.025 at 106.125 (Oct). Large supplies are weighing heavily on the market and stifling attempts to rally. If the falling cash market can find a bottom, this should help support futures.

 

Hogs rebounded today from their oversold condition, + 1.125 at 61.350 (Oct) and +1.050 at 57.200 (Dec). Is the market finally running out of sellers? Weekly slaughter numbers are 3.93% higher than last year. Keep an eye on whether a post-Labor Day rally is able to materialize.

 

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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