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Closing Comments

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Closing Comments

 

Corn had an “up day” but encountered price pressure leading into the close, +2 at 3.92 ½ (Sept) and +2 at 4.04 ¾ (Dec). Futures were able to make a steady climb in this holiday-shortened week to safely over the 4.00 mark for new crop. Weather models have continued to drive the market, with persistent heat and below normal rainfall on the menu, across much of the Western Midwest and Plains. The export story offered support and weakness, as the USDA reported a private sale of 143K MT of corn to Mexico, with 132K MT of the order slated for 2017/18. Regarding weekly export sales as of June 29th, corn was pegged at 140,300 MT for the current year and 74,500 MT for next year, disappointing vs. expectations of 350K-700K MT. This is in line with the seasonal slowdown trends. Look for Monday’s crop conditions report to likely show a modest decline in corn ratings.

 

Soybeans continued to find strength with strong meal values and weather uncertainty, +15 ½ at 10.06 ¼ (Sept) and +16 ¼ at 10.15 ½ (Nov). New crop beans are at a high not seen since March 7th. Weather looks to be more favorable to the East with more consistent rains, while the West may languish. Much of the bean acreage expansion this year was planted out in the West, and this is the area that has been hardest hit with devastating drought. In weekly export sales announced by the USDA, soybeans showed a solid 365,500 MT in the current year and 73,200 MT for next year compared to estimates of 250K-600K MT. China has continued to buy July soybeans from Brazil and is moving into offers for August. Watch on Monday – Will the EU and GFS weather models show a significant pattern change when the market opens?

 

Wheat traded both sides of unchanged, with the leader, Minneapolis, closing weakly for a loss, -2 ¼ at 7.66 ¾ (Sept). Chicago and Kansas City also succumbed to pressure, giving back some of the recent gains at -4 and –3 ½ (Sept). The USDA reported wheat weekly export sales well within the range of expectations, as they were announced at 375,300 MT vs. thoughts of 300K-550K MT. In addition to all the concerns expressed for the U.S. spring wheat crop, Canada has now emerged as red alert on the Drought Monitor, with crops in the reproductive phase. There is little rain on the horizon the next 10 days. It is expected that this will result in their crop conditions and yield prospects being lowered, similar to the Northern U.S. Plains.

 

Live Cattle showed some indifference today with a small setback, -.175 at 114.775 (Aug). The holiday-shortened week featured lower cash markets with light trading. The short-term is still heavy on supply which will continue to apply downward pressure. USDA boxed beef cut-out values continued to decline for the week with yesterday showing $220.05 vs. last week’s $229.43. Beef production is up 3.7% over last year same period.

 

Hogs tested key support yesterday and were back to positive gains today, +.575 at 83.225 (Aug) and +.250 at 70.975 (Oct). Will pork see a seasonal peak in value soon? The market is overbought and technicals are showing bearish divergence, which means the market may be running out of steam for further upside movement.

 

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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