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Closing Comments

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Closing Comments

Crude oil had its second big day lower following yesterday’s bearish inventory report while the US dollar was unable to continue its rally.

 

Corn reversed fortunes today on short-covering and bargain-buying, posting its best day since July 8th. Farmer selling has come to a halt with crop insurance floors kicking in below these levels for many and the pressure of old crop selling two days past. Yield reports filtering in now from the mid-South and the Southern corn belt. Generally good yields but lower than expectations in some areas. Reports of diplodia and aflatoxin in some pockets, but the preliminary data is too soon for trends to be established. Harvest will move into full swing in the southern corn belt after Labor Day. Weekly export sales for old/new combined came in within trade expectations while the daily reporting system showed a sale of 129,540 tonnes of US corn to Mexico. CME is lowering the margin requirements for corn futures starting tomorrow. China sold 516k of corn of the 3.1M at auction – the corn is low quality corn that is 3+ years old.  USDA said 455.4 mln bu of corn was used for Ethanol in July, up from 448.4 mln a year ago. July corn usage is up 6% in July from June and 1% from a year ago.

 

Soybeans traded mixed but was able to close higher on the day after trading new lows on the run. Weekly soybean sales came in within trade expectations.  Canola was higher for the second day in Winnipeg on short-covering, optimism over resolving the Chinese trade dispute and global tight supplies of veg oils. USDA reported July crush of soybeans of 153 mln bu vs June crush of 154 mln. Soy oil supplies on hand were lowered from June.

 

Wheat was higher across the board, led by Kansas City, on technical buying, short-covering and growing interest in the quality wheats as reports out of Europe continue to reduce their quality status. Japan has resumed their buying of US white wheat after halting purchases following the discovery of unapproved GMO in deliveries in July. USDA export data fell short of trade expectations but the daily reporting system posted a sale of 279,000 tonnes for 16/17.

 

October Cattle closed into new lows, limit down today. Trade has been volatile the past few days which can be indicative of bottoming action. The shortened kill week next week and continues supply woes aided by heavier weights have had packers reluctant to pay up and send cash cattle trade lower this week. Bearish target on the continuation cattle chart near 100.50.

 

Hogs futures were higher for the third day helped by their discount to the lean hog index. Some spreading was seen by market participants buying hogs and selling cattle. USDA reported average cash hog price in IA/MN $2 lower from Wednesday to $60.45. Wholesale prices were up 48 cents.

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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