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Closing Comments

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Closing Comments

 

Corn could not find a story today to bolster optimism, -2 at 3.50 ½ (Sept) and –2 ¼ at 3.64 ¼ (Dec). The attention is shifting away from weather to field surveys, with the Pro Farmer Tour starting Monday. Two private groups in IL gave results from their field surveys and they showed that yield is down 10-20% from last year. Many are skeptic of the USDA report last week, and are looking for a reason or confirmation that the crop yield is not nearly as high as predicted. Weekly export sales announced by the USDA were solid, for a total of 734,200 MT, of which 671,800 MT was for 2017/18. Expectations ranged from 600K-700K MT.

 

Soybeans were up as less rains fell on important areas of IA and IL that are deficit of soil moisture, +8 ½ at 9.30 ¼ (Sept) and +7 ¾ at 9.33 (Nov). Limited rain events are in the forecast for the next 10 days, which is prompting concerns of pod abortion if a nice rain does not materialize. The USDA announced a private sale of 165K MT of optional origin soybeans to China. The U.S. is in a favorable export position as Brazilian farmers are holding on to their grain with low prices resulting from their weak currency. USDA weekly export sales came in well above estimates of 300K-800K MT, as the USDA pegged 2016/17 sales at 453,200 MT and 2017/18 at 899,400 MT.

 

Wheat was a drag on the grain complex today, down across the board – Minneapolis HRS -4 ¼, Kansas City HRW -5 ¼, and Chicago SRW -5 ¼. The USDA announced weekly export sales above estimates of 300K-600K MT at 633,500 MT. The weak Dollar has been supportive, trading in a range that is the lowest in 15 months. U.S. wheat is staring at the prospect of higher future demand, as world supplies continue to be downgraded. Australia and Canada’s crops will be down almost 20 MMT due to dryness, the U.S. crop will be off over 15 MMT and Europe will be down 1.5-3.0 MMT. So, even though Russia is up 5-7 MMT on their harvest, it will not fill the void.

 

Live Cattle exhibited the volatility that has become commonplace as of late, dropping more gains, -2.350 at 107.125 (Aug) and –2.100 at 106.225 (Oct). In the short term, liquidation selling is in control, but there is hope that other factors such as the large discount of futures to cash and the prospect of increased imports to China will win out. Boxed beef cut-outs were down to their lowest level since February 23rd at $197.51.

 

Hogs followed yesterday’s downward momentum with more futures losses, -1.850 at 66.925 (Oct) and –1.675 at 61.800 (Dec). Follow through selling was the trend of the session, as bearish factors such as increased weights, higher slaughter numbers and weakness in pork bellies weighed on the market.

 

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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