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Closing Comments

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Closing Comments

Corn started the trading week higher but succumbed to selling pressure for much of the day despite export inspections posting the third largest number of the year at 53.5 mln bu. The key to the corn market finding support is if the anticipated ridge forecast to move into the central Midwest for the end of July is realized. If the hot/dry weather returns during grain fill, the market will anticipate losing the very top end off the yield expectations. Ahead of tomorrow’s USDA report, analysts are forecasting 16/17 corn production at 14.5 bln bu compared to last month’s 14.43 estimate with a 16/17 ending stocks expectation of 2.21 bln and a 15/16 ending stocks expectation of 1.81 bln. The bearish expectations have likely been built into the price. Look for more focus to be on every weather forecast on the late July ridging. Crop condition ratings for corn rose 1 percent to 76 percent. The corn market is in an oversold condition, the stochastics crossed for higher today and should provide stability to price barring a bearish surprise tomorrow (market is already expecting bearish info) and continued cooperative weather into August. For now, December rallies will encounter resistance in the 3.85 to 3.95 area. Seasonal tendencies in corn is strength into the third week of July. Funds were reported sellers of 14,000 contracts of corn today.

Soybeans were lower today on the cooperative near-term weather outlook.  Seasonally strong export inspections came in for beans at 13.7 mln bu – nearly twice last week’s pace.  For tomorrow’s USDA report 16/17 soybean production is expected at 3.87 bln bu compared to last month at 3.8 with a 16/17 ending stocks of 287 mln, up from the 260 in the June report. With the demand structure, soybeans have the least amount of room for a weather problem come August. The outlook will be watched closely each day as August approaches. Soybean crop condition rating increased 1 percent from last week to 71 percent.

Wheat sagged on pressure from corn, the stronger US dollar and positioning ahead of tomorrow’s USDA report. The Wheat market right now is more interesting in the European market as Euronext futures rose to their highest levels in almost two weeks and the market builds in expectations for wet weather affecting yields and quality in the French crop.  Export inspections were 34% off last week at only 13.8 mln bu. Spring wheat conditions dropped 2 percent from last week to 70 percent.

Long liquidation and fear of what cash prices may hold later this week sent Cattle and Feeder futures lower to start the week. Today’s break in cattle brought the front month to new lows and back to the down-sloping trendline. Prices should be able to stabilize and post a summer low unless cash prices can confirm the need for more weakness.

US Midwest cash Hog prices traded steady to $1 lower on good supplies. Hogs are in an oversold condition and should be able to stabilize price for the near-term. Cheap feed supplies and moderate temperatures have the market concerned of greater supply to come through better gains and herd expansion.

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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