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Closing Comments

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Closing Comments

 

Corn was up once again with hot temps in the Western Corn Belt over the next three days and growing concerns about the Plains and western 2/3 of Iowa, which is in desperate need of rain, +8 ½ at 3.91 (Sept) and +8 ½ at 4.04 ¾ (Dec). Also providing strength was the USDA weekly export sales report, as of July 13th, at 466,500 MT of 2016/17 crop and 212,100 MT of 2017/18 crop. Expectations were in the range of 350K-700K MT. U.S. corn sales are up 16.5% over last year. The drought in Montana and the Dakotas is spreading east and south on the Drought Monitor and poses further risk to crops. Will crop conditions on Monday show another 1-3% reduction in good/excellent ratings? Another leg lower in crop conditions could confirm thoughts of a sub-165 BPA.

 

Soybeans were up again today on weather forecasts showing warm/dry in the West both in the 6-10 and 8-14 day forecasts, +14 ¼ at 10.18 ¼ (Sept) and +14 ½ at 10.27 (Nov). USDA reported soybean weekly sales a solid 409,600 MT of 2016/17 and 1.522 MMT of 2017/18, with expectations in the range of 1.4-2.0 MMT. The large 2017/18 sales were a reflection of last week’s contract signing by Chinese crushers. Chinese demand does not look to be letting up in the slightest. Other customers this week included Mexico, Japan, Indonesia, and Costa Rica. Brazilian farmers have been less interested in selling this week due to the strengthening Real. The market continues to be in a day-by-day weather trade mode, and the bountiful supplies on hand in the U.S. and abroad are keeping rallies from becoming too extreme.

 

Wheat has labored under long liquidation of spec funds recently, as Chicago and KC notched new lows in the overnight. But, the pull of corn and beans coupled with global dryness concerns (Australia in particular) helped to spark a turnaround. The Dollar is also weak in relation to other global currencies, which is providing support to exports. Wheat came in with a strong showing on the weekly export sales log, as the USDA announced 2017/18 sales of 669,500 MT, well over expectations of 250K-500K MT. The largest buyer this week was the Philippines – other customers included Korea, Mexico, Venezuela, Nigeria, Taiwan and Japan. Also, influencing trade are rains expected to cover 35% of the spring wheat acres over the next several days. Ending session numbers tallied Minneapolis +3 ½, Kansas City +3 ½, and Chicago +2 ¾.       

 

Live Cattle were pressured by weaker cash cattle from yesterday, with light trade in OK and TX at the $118.50 level compared to $120 last week. August futures were down –1.400 at 115.875. Also, providing weight on the market are declining boxed beef prices. The beef cut-out yesterday was 32 cents lower at $207.73 and markedly down from last week’s $212.69. USDA Cattle on Feed report and semi-annual Cattle report are due tomorrow at 2pm CDT.

 

Hogs gave back a good portion of yesterday’s gains, -1.475 at 81.100 (August) and -.950 at 67.850 (Oct). On the one hand are the bearish production numbers on the horizon for the 3rd and 4th quarters, and on the other are persistently high pork prices and a lower Dollar, which is helping export demand.

 

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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