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Closing Comments

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Closing Comments

Corn traded higher on bargain hunting but the strength was capped by the continued big crop expectations. EIA report showed a small increase in ethanol stocks and a growth in production of 6,000 bbl to 1,004,000 bbl/day. Crude oil traded higher despite the bearish inventory report as much of the information had already been built into price.  Exporters announced a sale of 290,000 tonnes of US corn to ‘unknown’ for 16/17. The Brazilian government is continuing to work on their regulations to allow for the import of US GMO corn for feed use. Crop condition ratings continue to support the expectation of record yields, the question now is how big will big be? FC Stone’s elevator survey earlier this week noted a 175 bpa expectation, however their August estimate overestimates final USDA yield 65% of the time. Some comments percolating that yield estimates are starting to tail off from last week’s field observation – a not uncommon trend as the plant settles on how many viable kernels it wants to invest in for the rest of the season. The market will continue to debate what impact this year’s rapid maturation will have on final yield as well as remaining tuned in for any disease concerns.

Soybeans found good early support off export demand and the oversold condition of the market, but struggled to hold on to all the gains into the close. November closed the day up 2 ½ cents. Demand showed up this morning as USDA’s reporting service noted a private sale of 256,200 mt of soybeans to ‘unknown’ and another 441,000 mt of soybeans to China for 16/17. Soybean basis continues steady on export demand. Farmers in some areas are starting to note the onset of white mold due to the moist conditions.

Wheat saw short covering, especially in Chicago as the market has become oversold and seasonally should see supportive price. News out of Russia indicates a growing expectation of good crop production, adding to their surplus which should continue to keep a lid on global FOB prices while the French production issues continue to provide a supportive undercurrent to the market – specifically in the milling quality wheats. The market is prone to continued short covering rallies with the large short position held by the funds.

Cattle and feeders continued higher as higher wholesale beef values added to optimism to see stronger cash prices toward the end of the week. Tuesday’s choice beef was up $.70 with select up $.124. Beef demand is expected to pick up in August in anticipation of late summer grilling demand. Some chatter that packers may be short on supplies.

Hogs struggled again on weak cash prices and ho-hum wholesale pork demand. USDA noted Tuesday’s average cash hog price for IA/MN was down 27 cents from Monday. Packers are thought to have enough hogs to cover their needs for now.

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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