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Midday Update

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Midday Update

·         Upside momentum appears to be waning for the dollar, with expectations of a rate hike perhaps already priced into the currency market. As such, money managers are buying the major commodity indices, seeing prices at many year lows as a value. The indices haven’t confirmed lows on the charts yet, but today’s buying is boosting gains in the grain and oilseed markets, which were going up on their own merits. One major investment advisory firm advised its clients that commodities are a good buy at current levels.

·         Export shipments for the week ending August 6 totaled 31.7 million bushels of corn, 8.2 million bushels of grain sorghum (strong), 5.6 million bushels of soybeans and 13.4 million bushels of wheat (soft).

·         November soybeans gapped higher overnight, leaving a bullish island reversal on the charts. That encouraged short-covering, but also active bottom-picking buying interest, with prices currently 21 cents higher. Fundamentally, the rally is rooted in expectations for USDA to slash new-crop stocks by cutting both acreage and yields on Wednesday.

·         Corn futures reluctantly followed soybeans, but then garnered momentum as the charts began to turn. December futures are 14 cents higher and approaching the chart gap at $3.9925 left on July 27. Fundamentally, traders expect USDA to take a couple bushels off the 2015 yield Monday. Water Street’s flyover pictures are receiving chatter in the market, including being featured on FoxBusiness network this morning as prices were rising.

·         Wheat futures are up 15 in Chicago, and 13 cents in KC & MN on short-covering amid ideas that a bottom may be behind us. However, wheat struggled to garner any upside momentum until corn began to take off.

·         Live cattle futures are 40 to 75 cents higher after cash trade Friday afternoon was $2 to up to $5 higher on the week. However, futures are well-off their highs as feeder cattle losses weigh on the fats.

·         Feeder cattle opened higher, but are now trading $0.45 to $1.10 lower as corn prices take off amid worries about tightening margins.

·         Lean hog futures are breaking lower, hitting sell-stops below chart support with cash hogs steady to mostly $1 lower this morning. Product movement is quite slow this morning, with the composite price off $0.82 on weaker rib, loin and belly prices.

 

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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