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Closing Comments

 

Corn was down again today, as there is no fresh news to inspire buying, -4 at 3.42 (Sept) and –4 ¼ at 3.55 ¾ (Dec). Yesterday’s Pro Farmer results included an estimated corn yield for Nebraska of 165.4 bpa, which is higher than the three-year average of 162.5 bpa. Indiana also came in above the three-year average of 167.1 bpa at 171.2 bpa. The Crop tour was set to run through IL and IA today. The Tour will end in Rochester, MN, tomorrow afternoon. Funds have continued to pile on to their short positions, as they are maintaining a bearish posture until more definitive yields are known.

 

Soybeans traded both sides today, with both bullish and bearish news to consider, +1 ¼ at 9.35 Sept) and + ½ at 9.38 (Nov). Soybeans had mixed news on the export front, as the USDA announced a cancellation of 640,970 MT of soybeans sold to China for 2016/17. The USDA also announced a sale of 295K MT of soybeans for delivery to “unknown”, with the bulk of it being for 2017/18. The U.S. Commerce Department has finally come out with a preliminary ruling on biodiesel dumping into the American market. They are imposing a duty, retroactive to May, of 50.3-64.2% against Argentine biodiesel imports and a 41-68% duty against Indonesian biodiesel. These two countries together exported 546 million gallons to the U.S. in 2016 and now the vegoil will need to come from other sources, which will increase U.S. soyoil domestic demand. WASDE will report their view on the impact on U.S. soyoil demand in a September report. The Pro Farmer Crop Tour results from yesterday showed bean pod counts in Nebraska to be 1,131 vs. the three-year average of 1,182, while Indiana was penciled in for a 1,164 pod count against the three-year average of 1,169. It is worth noting that there is not a correlation between the Pro Farmer pod counts and final U.S. soy yields.

 

Wheat was mixed with Chicago leading the way, +1 at 4.03 ¼ (Sept). Kansas City and Minneapolis were –1 ¼ and –2 ½ respectively. Both Chicago and Kansas City hit new contract lows yesterday. It is hard to envision too much of a bounce with the weakness in the other grains, and KC is in a very oversold condition. Longs have been shedding their positions in both KC and MN as of late. As has been discussed previously, there are some tough areas around the world including Australia and Canada, that are helping to offset some of the large gains in the Russian yield. The weak Dollar is definitely a positive for the U.S. on the global scene as American wheat is among the least expensive in the world. This is allowing the U.S. to bid competitively to non-traditional buyers, such as North African nations. Watch to see if wheat can put in a bottom soon.

 

Live Cattle gave back some of the recent gains from the past two days, -1.075 at 105.650 (Aug) and –1.550 at 106.175 (Oct). Boxed beef cut-out values continue to trend down, from $198.95 last week to $193.03 this week. Carcass weights are being watched closely as both steers and heifers were up in the Aug 6th report. As weight levels rise so will the beef tonnage supply.

 

Hogs continued the trend lower on long liquidation selling, but were able to rebound off the daily lows, -.325 at 63.550 (Oct) and –.200 at 58.850 (Dec). Large supplies and weakness in belly prices were influential. The pork cut-out value continues to drop, now at $88.20, down from $93.48 last week.

 

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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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