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Midday Update

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Midday Update

·         The correction in the currency market with a stronger euro and weaker dollar continues after European leaders reportedly told Greece to “put up or get out” by Sunday, removing much of the uncertainty from the market, with an end apparently in sight. The dollar is currently trading about 600 points lower on the day.

·         Stocks however, remain under pressure due to the rout in China, amid some reports of money shifting from the equities to the commodities, although I believe the amount of money making that transfer remains small at this point.

·         USDA’s daily export reporting system today noted that “unknown destinations” bought another 8.8 million bushels of U.S. new-crop soybeans over the past 24 hours, indicating that the break in prices is stimulating fresh demand.

·         The Department of Energy reports that crude oil stocks rose another 0.4 million in the week ending July 3 to 465.8 million barrels. That keeps supplies near their highest level of the past 80 years for this point in the year. It was the second consecutive week of supply increases, raising concerns of burdensome stocks once again, particularly after recent data showed an increase in rig counts as well.

·         The Department of Energy reports that ethanol stocks rose to 19.8 million barrels in the week ending July 3, versus 19.5 million the previous week and 18.3 million barrels in the same week last year. Ethanol production rose to 987K barrels per day during the week, up from 968K barrels the previous week, up from 982K barrels in the same week last year and just below the record of 994K barrels per week set two weeks ago. This keeps processors as active buyers of corn as farmers sell on this summer’s rallies.

·         Egypt’s state grain buyer reports that it purchased 4.4 million bushels of Russian wheat this morning, while also buying another 2.2 million bushels from Ukraine. U.S. wheat was more than $1.30 per bushel above the cheapest offers from the Black Sea region.

·         Corn futures are 1 to 2 cents higher on bargain-hunter buying and good ethanol demand.

·         Soybean futures are up 11 cents on good processor demand, with an added boost from this morning’s export sales report. Bargain-hunter buying is being seen after the recent sharp price break.

·         Wheat futures remain under pressure due to the lack of competiveness of U.S. wheat, but losses are limited by a plethora of weather problems in major producing regions of the world. Chicago is down 8 cents, while KC is down 3 cents and Minneapolis is down 3 cents.

·         Live cattle futures are down $0.70 to $1.10 on continued weakness in the product market, with expectations of steady cash at best this week.

·         Feeder cattle are down $1.80 to $2 on weakness in the fats and strength in corn.

·         Lean hog futures are generally $1.15 to $1.45 weaker beyond the expiring July contract on plentiful supplies. Illinois may slaughter a record number of hogs this week. Even so, the cash market is mostly steady to 50 cents higher across the Midwest. Product prices were steady to weaker.

 

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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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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