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Midday Update

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Midday Update

·         The dollar dropped more than 1,000 points earlier this morning when a little-known employment cost index came in well below Wall Street expectations and near record lows, suggesting major problems in the jobs sector. That argues against a rate hike in September and also suggests that economic problems could slow demand for commodities. As such, both the dollar and the major commodity indices turned lower, providing a drag for grain and oilseed prices.

·         USDA’s daily export reporting system today indicated that Mexico bought 2.8 million bushels of new-crop corn in the past 24 hours, along with another 1.4 million bushels of the 2016 crop. Furthermore, “unknown destinations” bought 2.5 million bushels of hard red winter wheat, 1.4 million bushels of white wheat and 0.8 million bushels of hard red spring wheat.

·         However, the big disappointment came when USDA confirmed that China cancelled previous purchases of 7.3 million bushels of old-crop soybeans. That comes one day after the agency’s weekly export sales report showed a three-month high of 15 million bushels of old-crop sales, including 11 million bushels sold to China. Even so, new-crop soybean sales to China have improved dramatically over the past couple weeks.

·         Soybean prices are 8 to 9 cents weaker following the announced cancellation. The cancellation allowed traders to refocus on expectations of a bumper crop this year that will keep global supplies high.

·         Corn prices are a penny lower, feeling the pressure of sinking soybeans and the broader commodity sell-off. However, they remain well-supported on the weakness due to a sense that the market may have already priced in big yield expectations.

·         Wheat prices are generally steady to 2 cents higher as the market tries once again to carve out a bottom.

·         August live cattle are holding on to 45 to 50 cent gains while waiting for this week’s cash trade. There are reports that Nebraska feeders are passing on offers of $145 from a major packer, which would match last week’s trade. The deferred contracts are 60 to 80 cents lower. Boxed beef prices are mixed.

·         Feeder cattle are $0.50 to $0.90 cents weaker on compressed margins.

·         Lean hogs are breaking $1.50 to $2.50 weaker on concerns that supply will exceed demand. The cash market is mostly stead. Product prices are weaker.

 

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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