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Closing Comments

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Closing Comments

Outside markets were supportive today on the general feel that the UK “Brexit” vote will be to remain with the EU. This led the US dollar lower, providing support to commodities such as crude oil. However the anticipation of rains in the Midwest over the next couple of days took some of the wind out of the weather premium balloon to start the week in grains.

Corn struggled to hold on to its fear premium as near-term rain prospects weighed on the market all the way from last night’s opening bell. This morning’s export inspections came in close to trade expectations at 48.6 mln bushels.

This is the time of year corn can see a seasonal high. The outlook for warmer than normal July and August may maintain some weather premium here, especially if the anticipated rains this week don’t materialize to the degree expected. A close in the December contract below today’s low would be a technical signal that there is a deeper break coming and new highs will need confirmation of July hot/dry to threaten pollination and grain fill. Crop conditions in corn were seen as unchanged at 75% good/excellent vs last week.

Soybeans had an inside day and were unable to find follow through strength from Friday’s reversal bar. Longer term the soybean market is likely to be underpinned by the tighter than expected supplies following the production challenges in South America and the strong demand pace to China as well as the persistence of the warm/dry outlook for August. Export inspections for soybeans showed above trade expectations at 11.6 mln bu. The long fund positions in soybeans and corn leave both susceptible to liquidation pressure on a shift in weather outlook. Soybean conditions lost one point of good/excellent vs last week coming in at 73%.

Wheat prices “lost the least” on the first day of trade this week as the market shook off most of the pressure coming from corn and soybeans in favor of support off the lower US dollar aiding the outlook to be able to compete on the global market. Export inspections where a respectable 21 mln bushels, besting the highest trade expectation. The EU crop monitoring service cut its forecast for the average soft wheat yield to 6.07 tonnes per hectare from their May estimate of 6.11. Spring wheat lost 3% in its good/excellent rating this week, coming in at 76%.

Live Cattle fell to four year lows to start the week on weaker cash cattle and wholesale beef markets last week. The ample cattle supplies and fund liquidation added to the pressure while the kill pace yielded big stocks for the wholesalers. Feeders were able to recover off early session lows but closed lower on the session. This morning boxed beef Choice cuts were reported off -$.49 and Selected was up $.58.  

Hogs finished mixed with support coming from ongoing concern that the hot weather would slow weight gain and add to the seasonally tight supplies. The cash hog index climbed to its highest level in nearly 13 months.

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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