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Midday Update

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Midday Update

·         The dollar is modestly lower, but at a new low for the month. Crude oil prices are down nearly $2 per barrel and trading at their lowest level in nearly five months on data released showing that Iranian output is already at its highest level since 2012. The major commodity indices are under significant pressure on global demand concerns after China devalued its currency by the most in more than two decades, but the indices generally held support and are off their lows.

·         Corn, soybean and wheat prices are down primarily due to four reasons. 1) The China currency devaluation, 2) Monday’s big rally triggered an increase in farmer selling, 3) Crude oil’s weakness stimulating additional commodity selling, and 4) Big private production estimates creating uncertainty ahead of tomorrow’s USDA crop report after traders had priced in expectations that the agency will cut its corn yield by better than 2 bushels and take better than 1 bushel off its soybean yield.

·         Expect this kind of choppiness due to conflicting crop information (which is typical of wet years) until combines provide real data for traders several weeks from now. There’s a lot of money out there looking for an asset class with a story, but it’s very nervous money.

·         December corn is down 12 cents, retracing much of Monday’s gains, but thus far holding above an area of support near $3.85.

·         November soybeans are down 22 cents in the nearby and 19 cents for November. November still has the bullish island reversal below it and remains 12 cents above Friday’s close, but is down sharply nonetheless on the above factors.

·         Wheat futures are down 16 to 17 cents in the winter wheat markets and down 13 cents in MN after losing support from the outside markets on the above factors.

·         Live cattle futures are steady to 10 cents cheaper today in quiet choppy trade while waiting for direction. October live cattle are holding support near $149 at this point, but buying interest remains limited. Product prices are higher, but on slow volume today.

·         Feeder cattle are quietly mixed, finding modest support from lower corn prices, but gains are capped by weakness in the fats. Feeder cattle traders are nervous about tomorrow’s USDA crop report.

·         Lean hogs are modestly mixed, with October extending losses after Monday’s chart breakdown. Product prices are sharply lower this morning on a break in loin, but and ham prices. The cash market is mostly steady to up to $1 lower in the Midwest.

 

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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