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Closing Comments

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Closing Comments

Corn continued to lead the move upward, as concerns are starting to mount regarding extremely hot weather and more dry days ahead, +7 ½ at 3.84 ¾ (July) and +6 ¾ at 4.02 ½ (Dec). July futures were able to break through and close above key resistance at 3.80. If managed funds rush to cover their short positions en masse, a rally could continue with weather’s cooperation. Rallies will be somewhat muted by farmer selling, as farmers are stepping up and bringing loads of bushels to the elevators. EIA Ethanol came out with their weekly numbers showing production down 21,000 barrels to 0.99 million barrels/day. Ethanol stocks were down by -781K barrels to 21.98 million barrels. Net ethanol margin is down 2 cents to 6 cents.

 

Soybeans found support in weather as well as strong meal trade, +7 ¼ at 9.30 ¾ (July) and +4 at 9.35 ¾ (Nov). The forecast for the next week looks hot, dry and windy with low humidity, which could take a toll on the Central U.S. If predictions are accurate, Minneapolis and Chicago could see 95 degree temps. This level of heat by June 15th has only happened seven times since 1872. However in the long-term, soybeans are still looking at a bearish fundamental picture with downside potential, without a major event. Look for Brazil’s CONAB to be out with updated crop production estimates tomorrow.

 

Wheat came roaring out of the blocks with the other grains, as Chicago SRW and Kansas City HRW finished +9 and +8 respectively. However, Minneapolis HRS was the laggard today, as profit taking from recent rallies weighed down the complex, -3 ¼ (July). Much more rain is needed across Montana and the Dakotas to help alleviate the severe dryness that is plaguing the area. The HRS wheat in South Dakota and western North Dakota is in the reproduction stage, and the current hot/dry environment is taking the top end off yield. If there is no rain in the next 5+ days, weather may even cause crop failure. In world wheat, it was announced that Algeria bought around 450K tons of optional origin milling wheat in a tender that wrapped up today.

 

Live Cattle has provided a measure of excitement of late, and they continued the volatile ride today, trading both sides of unchanged, +.575 at 124.175 (August). Feeders were trading with expanded limits today after their steep sell-off yesterday, and they continued the downward trend, -.575 at 154.800 (August). Boxes are higher in choice and select, and packer margins remain profitable at $141-142/head.

 

Hogs traded mixed but ended up in the red today, -.450 at 80.725 (August). Packer margins are a bit lower at $22.23/head and carcass values were lower by $.93 at $90.25/cwt. Look for August to have more upside potential.

 

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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