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Midday Update

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Midday Update

·         The dollar has traded both sides of unchanged today and is currently modestly higher, but is largely not a significant factor for the grain trade this morning. Crude oil continues to hold onto very small gains after falling to new 6-1/2 year lows earlier in the session.

·         Corn and wheat are garnering support today from the unwinding of spreads in which they which they were on the short (sold) end against soybeans. That in turn adds pressure to the soybean complex. August soymeal is down more than $10 per ton in very thin volume ahead of its Noon expiration, while August soybeans are down 15 cents. Both were up in strong trade Thursday on good demand, but any possible squeeze appears to be over for the expiring contracts.

·         Corn prices are fractionally higher, but have generally run out of buying interest for now after probing above Thursday’s high. Thursday’s gains were large on short profit taking following Wednesday’s gains, but traders will not likely have data sufficient to sustain a gain until the combines roll in early September, unless we see reports of a widespread disease outbreak.

·         Soybeans are down mostly 13 cents at this hour, being on the short-end of spread unwinding. November soybeans are trading near their session low and just 3 cents above Thursday’s session low at $9.11, which is a key area of support to hold. The dynamics here going forward are very similar to my corn comments above.

·         Wheat futures are generally a nickel higher on spread unwinding, with Chicago September garnering technical strength after basically holding support at $4.90. Here again, U.S. wheat is struggling to remain competitive and therefore generally needs help from the outside to sustain a rally.

·         Live cattle futures are down $1.15 to $1.30 this morning on fears of weaker cash trade. Packers were said to be offering $147 in the Plains, while feeders were asking $153 per cwt on a live basis. However, there are unconfirmed reports that packers have raised their offer to $148 in Texas, where numbers are smaller. Product prices are modestly weaker this morning on very thin volume.

·         Feeder cattle are generally $1.50 to $1.80 lower beyond the August contract on worries about margin compression.

·         Nearby lean hog futures contracts are 10 to 20 cents higher, but well-off their highs on the lack of buying interest near resistance at $66 on the October chart, while the deferred contracts remain under pressure following USDA’s bearish corn data Wednesday on expansion fears. Product prices are modestly higher on thin volume at midday.

 

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

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