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Closing Comments


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Closing Comments


Corn followed yesterday with a repeat performance, -2 ½ (Sept) and -2 ¼ (Dec). USDA crop condition ratings yesterday afternoon showed corn unchanged from last week at 62% good/excellent. This compares with 75% last year and 62% average year-to-date. Some industry analysts are starting to agree on a corn yield in the area of 165-168 bpa. It is probable, that we may not know the final yield until January. This has been a “good but not great” growing season, and the variability between the haves and have nots has cast doubts into the minds of many. The risk of lower temps in September is also getting more attention. The next ten days for the majority of the Midwest will be dry and cool. While the northern states will see nighttime temps in the 40’s, a hard frost is not in the cards at this time.


Soybeans also trended lower at -4 ½ (Sept) and -4 (Nov). USDA crop condition ratings yesterday afternoon showed soybeans up one point to 61% good/excellent. This compares with 60% last week, 73% last year and 60% average year-to-date. Making up the rest of the pie is 28% fair and 11% poor/very poor. Setting pod progress was pegged at 93% complete, which is exactly in line with last year at this time. According to AgResource, the general consensus is that bean yield will land in the 47-49 bpa area, which is up slightly from trade guesses in July/early August. The U.S. will likely avoid major losses with the improved August growing conditions, except for some areas of the Plains that were already too far gone.


Wheat continues to feel pressure as futures continued their month long trek lower. Chicago SRW is thought to be about 100K contracts short. Without much fresh news, the enormous Russian crop on traders’ minds is weighing heavily. However, it is worth remembering that Russia will only be able to export around 29-30 MMT of the 90 MMT harvest due to logistical limitations. The weak Dollar is the only “bright” spot for wheat, as the Dollar has plunged to new lows. This coupled with wheat’s low price has made U.S. wheat some of the cheapest in the world. The U.S. should be competitive with Russia for Egyptian business, as Egypt is tendering for another shipment for early October. Spring wheat is ahead of schedule with harvest, as it now stands at 76% complete, which is 10% above the five year average. MN -7 ¼, KC + ½ and Chicago +2 ¾.   


Live Cattle was not able to continue to ride the mildly bullish Cattle on Feed report from last Friday, -.950 (Aug) and -2.275 (Oct). Will cash prices see bottoming this week? Packers are continuing to reap good profits but cattle feeders are starting to see red numbers at current levels.


Hogs are becoming oversold as they search for a low, -1.400 (Oct) and –1.425 (Dec). The market has been down sharply the last couple of weeks as short-term cash news is bearish. Will new slaughter facilities opening in September help provide support? USDA pork cut-out values declined again after the close yesterday by $.44 to $85.51.


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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