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Closing Comments

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Closing Comments

The US dollar extended its recent rally on the anticipation of higher interest rates yet to come, adding to weight on the commodity complex. EIA energy inventory report will be out tomorrow. Some chatter that gasoline usage rates for 2016 may exceed the record 2007 level is providing general price support for the energy market.

 

Corn suffered from continued fund selling and pressure from first notice day in the September contracts and saw widening the Sept/Dec spread by 2 ¾ cents today. September closed at 3.04 which is approaching the 2009 continuation low of 2.96 ¾. Yield expectations are high and market is tipped too bearish to sustain these prices for too long. In big crop years, early September lows are not uncommon.

 

Soybeans extended their weakness on continued rains and large crop expectations but were able to close just off their lows on near-term support and has so far been able to hold above the August lows. Deliveries are not expected in soybeans thanks to the solid cash soybean market and good export demand. The Chinese trade delegation is in the US establishing their annual ‘frame’ contracts. China still has significant open Oct/Nov slots and is expected to step back in as an aggressive buyer on breaks.

 

Wheat extended losses for the seventh session on the higher US dollar and first notice day in the September contracts putting new 10 year lows. Adding to the bearish sentiment is a Russian proposal wo completely eliminate their wheat export tax. European futures were higher today on bargain hunting and the European Commission’s revision lower of their soft wheat crop for 2016. The anticipated trimming of US winter wheat acres for 2017 is not yet affecting price, but the loss of acres will be real at these price levels. The CME announced an increase in their variable storage rate from 8 cents to 11 cents effective Sept 18.

 

Cattle and Feeders reversed their recent trend midday as buy stops triggered short covering in both markets. Both markets were lower this morning but reversed fortunes with October cattle closing 2.400 higher and Sept feeders up 4.150.

 

Hogs futures were higher off higher wholesale pork prices on Monday. Grocers are bringing in inventories ahead of the Labor Day weekend, but most are well supplied in anticipation of the shorter slaughter week. Futures discount to the lean hog index continues to provide support.

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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