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Closing Comments

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Closing Comments

Corn traded the September contract to new contract lows as cooperative weather and the traded expectation of record yields outweighed any interest in the demand side of the corn equation for now. While some areas are reporting crops not developing to match expectations, many areas have received perfect rains to alleviate crop development stress. The two remaining uncertainties are now the impact of warm nights on crop development and on the widespread development of disease across the corn belt the next four weeks. Export inspections came in at 45.05 mln bu, off of last week but still continuing the trend of strong export sales as the US maintains is lead position in export pricing. USDA said 421.3 mln bushels of corn were used in June in the production of ethanol, down from 441.3 mln bu used in June of 2015.

Soybeans fell on continued benign looking Midwest weather coupled with Friday’s COT report that showed Funds continue to hold sizeable long futures positions in Soybeans. Export inspections were an exceptional 24.661 mln bu of soybeans, above 20 mln bu for the second week in a row. The daily reporting system for the USDA also reported a private sale of 391,000 tonnes of US soybeans. Some rumbling in the market as China announced that it has embargoed 2 Brazilian soybean cargoes due to the finding of red dioxin soybeans. A similar cancelation in 2004 produced a huge amount of litigation. The trade will be watching if cargoes will be getting switched from Brazil to the US. USDA reported June soybean crush at 4.623 mln tons, off from the previous month of 4.83 mln tons as crush margins have dropped. Seasonally, soybean put in an early August low before finding support going into the first of September – the weather outlook and developments in South America and China will continue to provide volatile soybean trade.

Wheat resisted price pressure for most of today’s trade, but finally succumbed to spill over pressure from corn and soybeans going into the close. USDA export inspections for wheat were above last week, coming in at 24.338 mln bu which puts the wheat market on an export pace of about 38% above last year. Friday’s COT report showed funds holding a record short wheat position which should provide price support here as it tries to carve out seasonal lows if not a short covering rally on headlines.

Cattle and feeder cattle futures traded sharply higher to start the week on short covering and the energy from future’s discount to late last week’s cash trade. Friday packers in the US Plains paid $116 to $117 per cwt for cash cattle that had brought $115 a week earlier. Good packer margins and fewer animals for sale have helped to support the cash trade.

Hogs found support in October and beyond from their discount to the lean hog index and its technically oversold condition. The market continues to weigh under the ample supplies, Chinese cancellations and weaker wholesale prices.

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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