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Closing Comments

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Closing Comments

Corn settled mixed on this last day of August trade. The surprise weekly build in crude and distillate stocks added to the general pressure in commodities. EIA info on ethanol showed weekly production at 1.02 mln bbls/day, down just 5,000 from last week and a build of 109k bbls in stocks. USDA noted a private sale of 275,000 tonnes of US corn to Mexico for 16/17. The front month September contract inched closer to the 2009 low of 2.96 ¾. With the demand under the market, corn should be nearing a seasonal bottom.

 

Soybeans extended recent losses on weaker soy meal and soy oil futures and continued long liquidation by funds on the large yield expectations. Funds were estimated sellers of 6,000 contracts in soybeans. The November contract traded below the August 2 low today before closing off the lows back at support. The stochastics are oversold which should provide some stability – look for 9.35 for support and 9.20 below that. Demand fundamentals continue to underpin the soy complex, but for now the focus is on the expected large incoming supply.

 

Wheat in Chicago declined for the eighth straight session on continued global supply concern and the cancellation of Egypt’s purchase tender. Egypt’s zero-tolerance policy on ergot uncovered only one offer. USDA noted a sale of 138,000 tonnes of hard red winter wheat to ‘unknown’ for 16/17. Global prices for wheat are generally supportive, but US supplies are struggling to catch a bid as the big supplies of wheat make room for the large incoming corn crop.

 

Cattle and Feeders gave up some of yesterday’s gains as cash cattle trade is pointing to a possible trade $4 to $5 lower than last week in the Plains. Packers are reluctant to pay up on the shortened slaughter week and with plentiful supplies of pork and chicken at the wholesale level. Boxed beef prices traded lower this afternoon with Choice losing only 13 cents but select off -$1.46.

 

Hogs futures traded mixed to higher off support from firmer wholesale pork values. IA/MN hog weights are up 1.3 lbs from the previous week but still running down 1.0 lb from a year ago. Peoria hogs traded steady at $37.

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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