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Closing Comments

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Closing Comments

This morning payroll information for July saw the second monthly jump, pointing to a stronger US economy and the hope for better consumer spending. This sent the US dollar and the equity markets higher and treasury futures retreating on the anticipation of a September interest rate hike.

Corn found support into the close after early session weakness threatened recent lows. Continued active rains and cooperative weather kept the pressure on the corn market and its expectation for a new record crop but bargain hunters and short covering helped to give a positive finish. Some commentary is bubbling up though from scouts that there has been some retreat in areas off the massive potential they were observing just a couple weeks ago. Iowa State noted this week that their central Iowa test plots are expected to yield less than the long term average. Concern growing that good plant health isn’t universally turning into a record field. Informa Economics estimated a final yield of 169.8 bpa for a crop size of 14.694 bln bu. Informa has a 50/50 history of their estimate vs the August USDA report to come next Friday. In July, the USDA estimated final production at 14.540 bln bu. CFTC data showed Managed Money added -38,894 contracts to their position, putting them net short -104,432 – the largest net short position since April. Today funds were seen as buyers of some 5,000 contracts of corn.

Soybeans jumped after three days of consolidated trade at the 200 day moving average as strong demand scrambles for attention through the din of cooperative weather prospects for much of the soybean producing region.  USDA’s export reporting system had its eighth consecutive day of confirmed soybean sales to China or “unknown destinations.” The US is the key source for global soy demand until South America can come back online after the first of the year. As of Tuesday, Managed Money had sold off 15,351 contracts of their net long soybean position, netting a long of 106,338 contracts.

Wheat bull spreading (front month strength over deferred months) was at work in the wheat complex today as short covering and the beginning of five days of index fund rolling sent all three exchanges higher. The French Farm Ministry lowered this month’s estimate of the French wheat crop to a 30 year low of 29.1 mln mt vs last month’s estimate of 36.9 mln.

Cattle futures continued higher and were led by feeder cattle supported by cash cattle trading $2 higher than the previous week. Packers bought cattle in Texas, Kansas and Nebraska at $118 per cwt. Wholesale beef prices have been supported in choice and select. Monday evening will be first notice for the August live cattle contract.

Hogs traded mixed following yesterday’s contract lows. Plentiful hog supply continues to keep the pressure on futures and the lean hog index.

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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