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Midday Update

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Midday Update

·         Our assessment of the 2015 corn and soybean crops has not changed. The crop is doing quite well in the northwestern third of the Midwest, with rains either falling or in the forecast for some areas that were starting to dry out. Meanwhile, crops are not doing well in the southern half of the Midwest due to excessive rains in May, June and early July.

·         This week’s weather forecasts are improving, with dry western areas with high yield potential receiving rain, while saturated eastern areas dry out in the 6- to 15-day period, or at least see a trend toward lighter showers.

·         History argues for a pull-back in prices in July until we get yield checks in August/September that confirm the scope of crop problems. This pull-back is generally fueled by high crop ratings that cause fund managers to question reports of poor crops.

·         The high crop ratings are with us, with condition scores running above average for this time of year for both corn and soybeans. However, we live in an era where farmers can post pictures of their crops on Twitter that were taken by drones flying over their fields. Fund managers are able to see in real-time pictures of poor crop conditions to go along with satellite images showing poor photosynthetic activity. That makes a pull-back more difficult, but not impossible, to accomplish.

·         The dollar traded to its highest level since May 27 on expectations of an interest rate hike later this year, but money was flowing into the broader commodity sector anyway early today. However, that money flow has reversed, making it more difficult to extend/sustain gains in the grains.

·         Corn futures are holding modest 4-cent gains against a tide of selling in the broader commodity sector over the past hour, with traders holding onto concerns about this year’s crop.

·         Soybeans erased gains and are down 7 cents as money began to flow out of the broader commodity sector mid-morning.

·         Wheat futures are down 1-cent in Chicago, down 3 cents in KC and down 3 cents in MN on poor export demand.

·         Live cattle futures are down $0.85 to $1.25 on expectations of weaker cash trade and weaker product prices. Boxed beef movement was strong at 110 loads at mid-morning, but at weaker prices. Packers are offering $146 to $147 per cwt, while feeders are asking $153 in the Plains feedlot region.

·         Feeder cattle are $1.70 to $2.30 lower on soft fats and stronger corn prices.

·         August lean hogs are 15 to 20 cents higher on strength in the cash index, while the deferred contracts are weaker on supply concerns and weaker product prices this morning.

 

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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