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Closing Comments

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Closing Comments

Corn traded both sides of unchanged today before closing modestly higher, led by beans and a moderately warmer and drier midday run. Corn continues to struggle under perceptions of a large made crop, but will take leadership from beans and wheat if they can find a reason to rally. More heat in the weather runs could also continue the process of speeding up grain fill, and opening the door to a late season discrepancy between actual yield and very high expectations for the crop.

Soybeans surged higher today as a plummeting dollar highlighted the strong position of the US in the current export climate. The dollar broke sharply today as actual GDP growth of 1.2% fell well short of expectations at 2.6%. Mid-day weather runs were also supportive coming in slightly drier and hotter than overnight runs. The theme remains that at these prices we are building in a large crop, with very little in the next 3 weeks to make it larger, and any threat being taken seriously while trading below $9. Expect record large August exports that should top over 100 mil bu to also be supportive prices in the days to come.

Wheat had a wild day of trade, recovering off its lows in short order before backing off back into negative territory for the close. Information out of France continues to develop, increasing the likelihood that almost 90% of their crop will not make grade, and that the crop size will more than likely come in under 30 mmt. Despite this disaster, wheat is still languishing under the weight of a crop that is bigger than expected, even if it happens to be light on protein. A wheat recovery will happen quickly, but it remains to be seen what will finally cause the shorts to relent after having been right for the last 5 years of action.

Cattle could not hold gains today and closed near their open, forming a shooting star bar on the chart. They did hold key support at 111.67 in October, so more strength should be forthcoming if we do not retrace too much of this week’s action. Interestingly feeder placements out of Mexico have dropped off precipitously, to match sluggish Canadian feeder imports. This back-off in imports could affect overall placements, leading these numbers lower over the coming months and providing some much need support for the cattle complex.

The unrelenting downslide continued in hogs today, with early reversal action erased into the close with a new contract low close made at 59.05 in the October contract. Intra-day rallies are being sold aggressively both up front and in the deferred months, and for now we have not even begun the process of bottoming this market. With how precipitous this move has been, the bottom could come quick, but it is going to take a large recovery to even begin to have that conversation.

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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