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Closing Comments

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Closing Comments

While grains continued under pressure of the expectation for cooperative weather for crop development (but finished off their lows), the outside markets saw the US dollar continue its journey lower at the same time as stock indexes and crude oil saw selling.  

Corn traded the September contract down to within 1 ¼ of the 2014 continuation low of 3.18 ¼ on continued selling pressure on the anticipation of cooperative production weather bringing a new record US production. However the market ran out of sellers into the close after getting so close to the old low that so many in the trade have been eyeing. The fact that we are still in the first week of August, the market may now have to wrestle with several weeks of production uncertainty until combines can begin rolling in September. The crop will be good, the question now will be what impact warm weather and the potential for disease may have on grain fill. Interesting note out of Brazil is that they are working to adjust regulations to allow for GMO imports of corn from the US for animal feed use.

Soybeans traded lower for a majority of today’s session on the cooperative forecast continuing to push the long fund positions out of the market putting in new lows on this break, but ran out of fresh sellers into the close with Nov trading 8 cents off from its session lows. Soybean basis has been mixed to firm as nearby demand has seen some easing values while deferred bids are strengthening on upcoming export demand. Pressure will continue from the long fund position while support will come from the oversold condition of the market at the historical low correlation in final soybean yield to crop condition ratings.

Wheat struggled to hold on to early strength as bearish fundamentals in corn and wheat are holding funds in their short positions. However, Kansas City continues to lead price and is a good sign in the wheat market along with the expected support to come from the current huge short wheat position. European wheat futures continue to find support on the ongoing concern over the small, low quality French crop coupled with signals that Black Sea source prices are rising. Egypt’s grain buyer announced today that it had bought 60,000 tonnes of Russian wheat in a tender for an average price of $177.09 per tonne for Sept delivery.

Cattle and feeder traded higher again, but off session highs for the day. Boxed beef values this morning saw Choice jump $.70 to 198.40 and Select up $.97 to 191.19.

Hogs found support again today, mostly off its oversold technical condition after its recent melt-down. Dealers in Iowa noted steady trade today with some expectation of a seasonal bottom as retailers start covering needs as Labor Day approaches.

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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