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Midday Update

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Midday Update

·         The primary story across the board today is the ongoing rout in the global commodity and equity markets. Global economic fears are peaking, with the VIX (Wall Street’s fear barometer) trading at its highest level since December. The Midwest crop tour provided a distraction from these factors for the bulk of this week, but that steady flow of crop reports is finished, allowing traders to focus on the outside markets. Commodities dependent on exports to China are getting extra attention from sellers.

·         The dollar is down roughly 1,000 points, trading at its lowest level since June. That’s normally positive for the commodities, but in this case commodities are still selling off because the dollar’s weakness is largely reflective of economic problems that traders believe will keep the Fed from raising interest rates next month.

·         Corn futures tried to hang on this morning. This week’s crop tour created enough questions about the crop to make traders reluctant to add to their short (sold) positions. However, it is succumbing to the pressure, currently trading 5 cents lower.

·         Soybeans are taking a larger hit due to China fears and weaker charts. November soybeans are down 13 cents, but modestly off their lows after selling dried up near $8.90. Soybeans are still seen as having value below $9.

·         Wheat is down 9 cents in Chicago, down 13 cents in KC and down 10 cents in MN. There’s little to hold wheat up when the rest of the markets are sinking. There’s just too much wheat out there. Chicago is holding above $4.90, but KC and MN are setting new contract lows.

·         Economic concerns are weighing on the beef complex, with a number of feeder cattle contracts down the $4.50 daily limit on fears of declining demand.

·         Live cattle futures are down $1.50 to $2.50 per cwt on the same demand fears, but are thus far holding above the late July lows. Boxed beef prices are weaker on thin trade volume.

·         Lean hogs are down $1.15 to $1.40 on fears that supply will overwhelm demand. The composite pork product price is down another $1.52 to $85.78 per cwt this morning on a big drop in belly (bacon) demand today. Cash hogs are steady.

 

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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