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Closing Comments

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Closing Comments

Corn had a mixed day of trade caught between large crop expectations and growing export demand. This morning’s export inspections showed the second biggest corn inspection of the marketing year at 57.164 mln bushels, up from last week at 45 mln and helping to narrow the lag from last year. Funds rolling positions out of September contracts to deferred months helped to support “bull spread” price action. Big crop expectations and the coming Friday USDA report kept a lid on short covering gains for now. December 3.60 will be a resistance zone on late summer rallies.

Soybeans reluctantly extended last week’s gains, helped by supportive export numbers 44% above last week at 35.715 mln bu (a huge summer number) but tempered by the high crop condition ratings supporting the expectation for record yields in many places. Soybean basis holding steady to firm on good export demand and slow farmer selling. USDA’s daily reporting system showed a sale of 246,000 tonnes to China for 16/17 marking the 9th consecutive day of soy sales announcements. Trade expects today’s condition ratings in soybeans to hold steady. The trade will be squaring positions this week as the market prepares for Friday’s August USDA report and the anticipation of a bump in yield and exports.  Today’s high will prove to be resistance to the market on a closing basis – supply will be the entire driver of price now as there is little doubt of the demand under the market.

Wheat export inspections were disappointing this morning, off more than 40% from last week and below trade expectations, coming in at 13.831 mln bu. Russian export prices rose last week despite the expectation of a large crop as the production problems in western Europe struggles with production issues. Wheat is seasonally trying to carve out a low and funds continue to hold on to huge short positions that they will eventually need to figure their way out of yet.

Nearby Cattle futures lost ground on profit-taking and softer wholesale beef prices on Friday but higher cash prices provided general support. Last week packers in the Plains paid $117 to $120 per cwt for cash cattle vs the previous week of $116 to $117. The market is hoping for improved beef demand as the Labor Day weekend approaches. Today is first notice day for the August contract expiring Aug 31.

Hogs struggled to hold early gains in the futures as cash hogs traded mostly $1 lower at many Midwest locations. Plentiful supply and so-so wholesale demand is keeping the pressure on rallies. Friday afternoon’s wholesale pork price dropped $1.14 per cwt from Thursday to $76.95, led by weaker pork bellies.

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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