Home Market Market Watch Closing Comments

Closing Comments


cid:<a href=image009.jpg@01CE6CE4.660D8B30“>

Closing Comments


Corn and the rest of the market was not significantly impacted by the USDA Supply & Demand report today, as weather apprehension is driving the market, +2 at 3.87 ¾ (July) and +2 ¼ at 4.06 (Dec). June 2016/17 corn carryout was pegged at 2.295 billion bushels, above the expected 2.28 bbu but in line with the previous report. June 2017/18 corn carryout came in above trade estimates of 2.09 billion bushels at 2.110 billion bushels. However 2.110 bbu was spot on with the previous report. Predictions for 2017 corn production was identical to the previous report of 14.065, but slightly above trade estimates of 14.0 bbu. Look for continued scrutiny of weather forecasts and comparisons between the GFS and EU models, as uncertainty stateside with the GFS model is playing a role. Also, driving the market next week will be the amount of managed fund short covering in conjunction with the amount of farmer selling.


Soybeans were able to keep pace with the upward trending corn in spite of a slightly bearish tone from the USDA report, +3 ½ at 9.41 ½ (July) and +4 ½ at 9.48 ¼ (Nov). U.S. soybean stocks were bumped up 15 million bushels due to declining crush and flat exports. Helping to provide support was the sale of 3 cargos of beans to an “unknown” destination and the fact that it looks like the U.S. will stay competitive with South America for the duration of summer. New crop soybean carryout is unchanged while the 2017/18 were estimated to be 495 million bushels higher. Related to South America WASDE upped the estimate for Brazil’s production to 114 MMTs, and Argentina was raised by 800K MTs to 57.8 MMTs.


Wheat was similar to beans from the standpoint that the USDA numbers were more of a bearish flavor, as old crop ending stock were bumped up by 2 million bushels. Wheat production also got a small promotion of 4 million bushels due to improved expectations for KS and CO. Much of the concern regarding the Western Plains is now dissipated, as the crop’s recovery from the harsh cold snap has been better than expected. HRW production was increased to 743 million bushels compared to the May estimate of 738 mbu. WASDE raised overall global stocks by 2.9 MMT to a record-level 261.2 MMT. Russia’s wheat production was enhanced by 2 MMT to 69 MMT. The market finished at: Chicago SRW -3 ¼, Kansas City HRW -2 ¼, and Minneapolis HRS +4 ¼.  


Live Cattle traded both sides of even today, settling up –.175 at 123.850 (August). According to Hightower, it will take a turn down in beef prices and a significant jump in cattle weights in order to confirm a near double top. The closely watched Fed Cattle Exchange had low volumes, with 334 head being sold at $136.81. Boxes have continued higher in both Choice and Select, while packer margins have remained strong at $140/head. Related to the Brazilian beef scandal, a raid was conducted by the Brazilian Feds on JBS offices on suspicion of insider trading. This scandal is worth monitoring, as Brazil is the world’s largest beef exporter and competitor of the U.S.


Hogs are continuing their seasonal increase in prices during the month of June, with July futures finishing +.500 at 82.700. The pork cut-out has continued to increase in value due to great prices for bellies and fat and lean pork trimmings, which is supporting higher cash hog prices. The high price of beef trimmings has also helped pork this season. How will hot weather in Iowa affect hog weights? It is worth noting that barrow and gilt weights are lagging 1.5% behind levels from a year ago. And, weights of hogs owned by packer has continued to decline as they are trying to take advantage of great margins by slaughtering now vs. later.

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.

or 1-866-249-2528