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Midday Update

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Midday Update

·         The Department of Commerce reports that real gross domestic product, the value of production of goods and services, rose by 2.3% in the second quarter of this year, falling below Wall Street expectations of 2.9%. However, the government adjusted first quarter data up to 0.6% growth, up from -0.2% previously. The data precipitated a rally in the dollar on the premise that growth was sufficient to support an increase in interest rates later this year; perhaps as early as September.

·         Strength in the dollar led to speculative selling of the major commodity indices, of which grain and oilseeds are a part. That took the shine off a good export sales report for USDA released about the same time. However, strength has returned as traders refocus on “cheap prices stimulate demand.”

·         Export sales in the week ending July 23 (million bushels); corn 14.4 million old- & 17.5 million new-crop; grain sorghum 4.2 million old- & 4.3 million new-crop; soybeans 15.3 million old- & 33 million new-crop; wheat 25.7 million.

·         USDA’s daily export reporting service today indicated that “unknown destinations” bought another 5.1 million bushels of U.S. new-crop soybeans in the past 24 hours. This sale will be presumed to be to China, but we probably won’t know until they are shipped.

·         Commodity Weather Group statement on this year’s rains: While still lagging the extent and severity of the ’93 wetness for the Midwest as a whole, record wet June/July rainfall totals have been noted in Peoria, IL, Fort Wayne, IN, and Toledo, OH, and only 1875 was wetter (>25") for the period in Indianapolis, IN.

·         Corn futures are 4 cents higher on the strength of ethanol, feed and ethanol demand and a technical bounce after falling so far this month.

·         Soybean futures are up 8 cents for the August and up 5 cents for the November contract on strong demand. We are slowly seeing an increase in disease reports, but not yet to the level that would excite the market. This is something to watch closely over the next few weeks.

·         Wheat futures are 2 cents higher in Chicago, 1-cent lower in KC and steady in Minneapolis, with large supplies capping gains along with a strong dollar, while support comes from bargain buying by end users following the recent break.

·         Live cattle futures are steady to 60 cents higher as traders wait for this week’s cash trade. However, sustaining a rally above Tuesday’s big short-covering rally has been difficult. Bids and asks in the cash market remain between $143 and $148 in the Plains, although there are reports feeders passed offers of $144 to $145 in Nebraska. Product prices are higher, but on slow movement.

·         Feeder cattle are modestly mixed while waiting for fresh direction, with concerns about higher corn prices.

·         Lean hogs are steady to 55 cents weaker today on weaker product prices on slow movement, despite strong export sales in this morning’s report. Cash hogs are mostly steady to up to $1 higher as Midwest heat indexes slow weight gain.

 

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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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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