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Closing Comments

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Closing Comments

Corn closed lower on the day after closing the morning session .09 higher.  Exports today were as expected.  Exports moving forward are still expected to be a friendly force without Brazil having much to bring to the table.  Ethanol production for the week ending July 8th averaged 1.004 million barrels per day.  This is up 2% from last year. Corn use needs to average 89.4 million bu. per week and corn used last week for ethanol was 105.4 million bu.

The story is still weather and the midday forecast limited some of the heat and put some moisture in for the 6 to 10 day which turned the markets in the midday.  Sunday night’s opening should be very interesting with the real heat expected to start on Monday.  If the heat is still in it will come down to if we get any rain or if higher temperatures persist into August.

Soybeans closed sharply lower and had a .64 cent trading range today.  The biggest concern for the soybean crop is August weather.  We have an expected carry out of 290 million and can’t afford to lose bu. during pod fill.  If the U.S. average yield slips to 44.7 instead of 46.7 ending stocks slip to 120 million bu. with a stocks/usage ratio of just 3%.  That would be the second tightest on record.  The addition of rain to the forecast today during the middle of the heat really took some concern away from the funds for the short term.  We are still a couple weeks from August so expect some close tabs to be kept on the forecasts moving forward. The mid-day weather model pushed the hottest temperatures further west and brought more rains into the 16-30 day outlook.

Wheat initially tried to push higher with the other grains but fell short when everything else turned lower.  U.S. ending stocks are projected to be the largest since 1987-88.  The market is oversold and may need to correct at least in time before it can go any lower.  Harvest continues and yields continue to impress. 

Cattle closed higher on the day on concerns that cattle may not perform well with the upcoming weather.  This could lower total amount of meat in the 3rd quarter which is expected to be large.  They still seem to be range bound with too much supply available to push thru the highs and good packer margins and boxed beef prices keep them from pushing through the lows.  Boxed beef prices will be important moving forward to keep domestic demand flowing. 

USDA cattle slaughter came in at 113,000 head yesterday bringing the total to 340,000 head this week up from 216,000 head last week and 323,000 a year ago. 

Pork close slight lower today after pushing toward the old lows from May 24th.  Hog weights jumped 1.6 lbs. for average weight during a time when average weights typically decrease.  This is very negative news during a time when supply is already a concern.  This market has been dependent on export sales and those came in at a yearly low of 6,200 MT with reductions from China.  Demand especially to China will be very closely watched as we move forward.

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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