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Closing Comments

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Closing Comments

General lack of direction today at the CBOT on moderate volume. Lower dollar, strength in crude and soybean oil helped to pull corn, soybeans and wheat off their daily lows.

Corn closed slightly higher. The bull spreads have been working in corn with September gaining on December roughly 1 ½ cents the last three sessions. Not a radical move, but a supportive sign nonetheless. Brazil’s sugar and ethanol maker Biosev noted that it would shift cane processing more toward sugar production and away from ethanol – this is part of the global shifts occurring that should continue a supportive tone to the US ethanol export program.

Soybeans traded both sides today as higher prices the EU is paying for soy products rallied. The Chinese continue to rack up sales as the USDA added 119,000 mt on their sales reporting. If soybeans follow their seasonal August strength, the market will be watching if Chinese buying continues to follow – knowing there is likely a record crop incoming. Basis at the Gulf rebounded after yesterday’s weakness thanks to the ongoing Chinese shipment demand. River operation at the lower Mississippi remains open despite heavy flooding but the rains have disrupted recent ship loading and unloading.

Wheat ended mixed. German farmer co-op noted their expectation for this year’s wheat harvest to be off -8.8% from last year’s record crop. The large crop in the hard red winter market has led to tight consolidation – the December KC contract has essentially traded within a 13 cent range for 15 sessions and is at the same price it was trading June 1. The old saying is don’t sell quiet markets…will wheat break out with energy? The best performing market has been the Minneapolis September contract which has rallied 40 cent since August 2nd but September Minneapolis has encountered selling exhaustion two days in a row.

Cattle and feeders moved lower on concern over what cash prices will be uncovered later this week. Cash cattle in the southern plains are priced at $120 to $122 but no bids from packers have surfaced. Good packer margins should be supportive to the market but weight this week is coming from more cattle for sale this week than last. The monthly Cattle on Feed report will be out Friday afternoon. On Feed is expected at 101.4% of a year ago.

Hogs gave up yesterday’s gains as packers look to have bought most of what they need for the week and slowing demand as Labor Day approaches will continue to weigh on the demand side of the equation.

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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