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Closing Comments

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Closing Comments

Corn closed lower by double digits and are working their way back to the low of 3.46 made on July 6.  Cooler temperatures in the last model run has had corn in negative territory since the overnight session began.  Rains moved through IA today dropping .25”-1.50”.  This system is expected to continue on through IL, IN, and W OH through Wednesday.  This certainly will help with concerns about heat. The models seem to be having a tough time being consistent past the 5 day period and have been back and forth with each model run.  Currently many analysts are expecting a yield over 170.  So if they expect damage from heat they may be adjusting from a higher yield than the 168 currently in place by the USDA.

Corn harvest is at the halfway point in South America and yields continue to be disappointing.  Logistics of moving the grain has also been problematic.  Argentina has a trucker strike currently but this hasn’t really slowed down movement to this point.  This winter could provide more demand for U.S. with the disappointing crops in SA.

Soybeans closed below a short term trend line today but not below the lows from July 8th. Combination of a wetter August and cooler temps in the 6 to 10 had funds jumping out of long positions.  Crop ratings yesterday afternoon had Soybeans 71% G/E when most expected the score to start seasonally dropping.  So far this crop is very highly rated from a historical stand point of G/E ratings.  The dollar was also adding pressure today at its highest level since March 10th.  Forecast will continue to be watched closely to see if the models do anymore flip flopping.

Wheat closed 8 to 9 lower today.  Funds as of July 12th were seen net short 134,383 contracts.  The record is 152,453 contracts.  Concerns about the size of European production this year was not enough to hold up the market for more than one session.  Europe is expected to lower production by almost 3-4 million tones led by lower yields in France.  Still just too much supply overall.  

Cattle have had a pretty good reversal bar today after posting solid gains yesterday.  The heat in the forecast should be enough to work the market back up to the upper end of the range.  Boxed beef are down from 208.70 last week to 202.57 this week. This is the lowest cutout has been since December 28th.  Cattle are trying to retest the same trend line they were able to hold yesterday

Pork made new lows again today and then accelerated those losses on technical selling.  Cash markets so far for the week are a $1.00 lower which has continued to pressure. USDA pork cutout values released after the close yesterday were at 89.73 up .72 cents from Friday and up from 88.96 last week.  Weights have been higher lately showing producers are not current with marketing’s but heat over the next several days should slow market ready hogs. 

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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