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Midday Update

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Midday Update

·         Commodities were under pressure overnight, but are slowly recovering this morning. That’s taking a bit of the pressure off the grain and oilseed complex, but not enough on its own to sustain a rally. There’s still a strong bearish sentiment on Wall Street toward the commodity sector, and particularly those commodities that normally see a lot of trade with China and Asia in general.

·         Rains continue to bless the western Midwest with moisture, which is expected to remain the case until sometime tomorrow when they scatter more broadly across eastern areas. Unfortunately, many shallow-rooted eastern areas may be disappointed. Regardless, the rains are seen as providing more help to good areas of the western Midwest soybean crop with earlier maturing corn seeing garnering less of a benefit.

·         Corn futures are 1 to 2 cents higher, benefiting on the long side of corn/soybean spreads this morning. Futures garner some support from the crop tour, which has frankly failed to impress. There are good yields in the west, with even a few in the east, but this morning’s reports are yielding more “average” comments than expected in the west while highlighting more of the problems in the east. Yet, many in the trade continue to find it difficult to believe that this year’s problems across the southern and eastern half of the Midwest could create the 2% drop from trend yield that we are suggesting. Amazing!

·         Soybean futures are down 12 cents this morning, receiving the short end of corn/soybean spreads. Soybeans benefit more from rains this time of year and are more vulnerable to demand issues in China if its economy crumbles. However, it should be noted that traders are viewing all of these factors from a perspective that the charts remain bearish following last Wednesday’s post-USDA collapse, leaving prices vulnerable near-term, with November just above key support at $9.

·         Wheat futures are down 5 cents in Chicago and down 6 cents in KC & MN. Wheat is not getting the needed help from the other markets, allowing traders to focus on a strong dollar and weak demand for big supplies.

·         Live cattle are 20 to 50 cents lower, falling sharply in recent minutes from their session high after October failed to probe above key resistance near $148 on the charts. This week’s showlist is 21,000 head higher, with carcass weights trending higher.

·         Feeder cattle are modestly mixed after erasing early gains as the fats fall and corn firms.

·         Lean hog futures are 15 to 45 cents weaker today on softer cash. Midwest cash hogs are steady to 50 cents lower in the closely followed Iowa/Southern Minnesota market, while mostly steady elsewhere. Packer margins are good, leading them to pull a lot of hogs in, but the supply remains large, with carcass weights expected to rise after Labor Day.

 

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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