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Closing Comments

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Closing Comments

Corn closed lower off weakness in the wheat market. So far, sellers have been reluctant on prices challenging the recent lows, but strength remains capped by farmer and speculative sellers on the expectation of a growing national yield after crop condition ratings remained unchanged again yesterday. Technically corn had an “inside day” showing the indecision and uncertainty of the market here yet in July. Technical indicators are oversold and showing fatigue – this can be remedied by sideways quite trade or by higher price.

Soybeans managed a higher close today on the record sales pace for July and the prospect of a return of heat to the Midwest after August arrives. Vessels are lining up at US ports as we work toward a solid record US July export pace. Continued rumblings of China buying on the break continues to be heard as the break provides a value opportunity to lock in their still open September needs. Strong crop condition ratings (even though suspect in final yield correlation) continue to have the market leaning toward a 1 to 2 bushel above trendline yield. The demand structure will need a well above trend yield to alleviate pipeline issues moving forward. AGR Brasil commented the possibility of a growth in Brazil soy acres of 2 percent, but the expansion could be offset by a shift in soy acres to corn due to the disparity of profitability between the two crops in Argentina.

Wheat suffered under the weight of European profit taking after Paris futures sold off for the second day in a row after putting in six month highs. The French wet weather has reduced yields and quality significantly, but yesterday’s European crop monitor noted that losses will be mostly made up for by good yields in other European regions. Black Sea offers have strengthened this week which should suggest limited downside from here in the wheat complex. A note from the Wheat Quality tour stated the expectation for below average spring wheat yields out of Southeast North Dakota due to the dry spell earlier this year.

Cattle futures extended their gains again today, supported by expectations of discounts in futures to this week’s cash price. The expectation for a pick-up in August demand provided fundamental support and the hope that cattle have confirmed a seasonal low.

 

Hogs found pressure again today as sufficient supplies have allowed packers the ability to cut cash bids. The trade is looking for the recent erosion in prices to level off as we work toward August and expect demand to pick back up.

 

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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