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Midday Update

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Midday Update

·         The dollar continues to post modest gains this morning, but strength is waning. That would normally support improving money flow into the commodities, but crude oil (another indicator) is testing March lows on supply concerns, trading near $42 per barrel on ideas that the oil glut will continue for some time.

·         No U.S. wheat was offered in Egypt’s latest snap tender. Our soft wheat is too expensive and has sufficient quality problems to keep it out of play. The cheapest bid came from Ukraine at $4.90 per bushel. The Black Sea is expected to have ample supplies of wheat to compete with low quality U.S. soft red wheat this year.

·         USDA reports that export sales in the week ending August 6 included 20.9 million bushels of corn (weak), 4.1 million bushels of grain sorghum, 27.8 million bushels of soybeans and 15.5 million bushels of wheat (soft). The data shows that row crop sales are shifting seasonally to the new crop marketing year. The new marketing year for these row crops begins September 1.

·         Grain and oilseed prices posted a nice bounce earlier today, considering the depths to which they fell on Wednesday following USDA’s crop report. However, strength in the bounce is waning as crude oil prices sink amid a malaise attitude among fund managers toward the broader commodity complex. There’s a lot of rhetoric on Wall Street about poor demand for the commodity sector due to global economic problems, although a few voice are emerging saying that this is a place to be buying.

·         Corn futures are up 2 cents on mild bargain-hunter buying and profit taking following yesterday’s big collapse.

·         Soybeans are up 5 to 6 cents on similar dynamics. September soymeal though is up $4.30 per ton on strong demand, providing some support for soybeans.

·         Wheat is up 8 cents in Chicago and 7 cents in KC & MN. The rally is seen more as profit taking following the drop to chart support at $4.90 that held in Chicago.

·         The beef complex is seeing follow-through selling after yesterday’s bearish reversal and technical failure. Live cattle futures are 15 to 90 cents lower and near session lows. October live cattle bounced off support at $146 while waiting for this week’s cash trade.

·         Feeder cattle are $0.40 to $1.60 weaker in follow-through selling from yesterday’s technical failure.

·         Nearby lean hog futures are $0.65 to $1.05 higher, after chart support for October lean hogs held support at $62 on Tuesday. Deferred contracts are weaker following yesterday’s bearish corn data from USDA, with traders fearing expansion in the hog industry.

 

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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