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Closing Comments


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Closing Comments


Corn followed Friday’s fireworks early, but tapered off into the close on this holiday-shortened trading session, +4 at 3.85 (Sept) and +3 ¾ at 3.95 ¾ (Dec). It is all about weather now that the USDA report is behind us, which showed corn at about 91 million acres compared to last year’s 94 million. The weather models are leaning toward warmer and drier for the Central U.S. with big concerns for crops in the Plains and NW Midwest. Is trend yield still achievable? It is likely to be a challenge unless corn hits all the notes from here on in. USDA weekly inspections showed corn at 1.094 MMT for the week ending June 29th compared to expectations of 950K MT. The USDA also announced two sales to Mexico of 120, 650 MT, 114,300 MT. This is welcome news as Mexico has been looking at alternative sources recently with NAFTA concerns looming in the background.


Soybeans were able to gap higher and push up over 30 points before settling for a very strong +23 at 9.73 ½ (Sept) and +26 at 9.80 ¾ (Nov). Weather and the position of a ridge forming in the west is causing all kinds of uncertainty and fears of July dryness/heat in the growing region. Many soybean acres, especially in an already drought-stricken North Dakota, could find themselves in the line of fire. Managed funds have been sporting a record short position for this late in the season, which provided a volatile combo with a bullish USDA report on Friday showing 89.5 million acres planted vs. expectations of 89.75 and stock 20 million less. More of the same was in order for today. Weekly soybean inspections announced by the USDA were 266,386 MT for the week ending June 29th, compared to thoughts of 300K MT.


Wheat had a very strong showing from the entire complex with Minneapolis leading the way. Not only are acres planted at a record low but conditions have been alarming. Spring wheat has not shown this strong of a weekly close since the summer of 2008. Minneapolis HRS finished +47 ¼ (Sept), followed by Kansas City HRW +29 ¾ at 5.59 ¼ (Sept) and Chicago SRW +29 at 5.55 (Sept). USDA inspections for the week ending June 29th were 505,031 MT compared to estimates of 550K. The USDA reported a private sale of 140K MT of wheat to an unknown destination.


Live Cattle finished down moderately, -.550 (August). Slaughter was up last week by 5.5% and there is a large supply on the horizon. Steer weights showed an 8 lb. jump from one week to the next, which is unusually high and would be viewed bearish. Nonetheless, cattle gained 102 points last week. expect beef prices to be under pressure for the next few weeks. August cattle have to close above 18.80 to confirm a shift to friendly technicals.


Hogs continued to show strength, coming off limit up on Friday, and finishing +.650 (August). The Hog and Pig report last week would seem to be bearish with higher supply, but pork is continuing to experience very solid demand both here and abroad. The counter-seasonal trend may continue for the time being as the market is not showing signs of a high.


Look for the NASS weekly condition/progress report on Wednesday afternoon this week. The market will re-open at 8:30am on Wednesday after the holiday recess.


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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