August 3, 2015

Fundamentals, Weather And Funds

August 3rd, 2015

Good Morning! Paul Georgy with the early morning commentary for August 3, 2015 at 5:15 am.

Grain markets are lower as fund selling and expectations of crop ratings to remain stable are weighing on the market. Commodity markets in general are showing a risk-off attitude. The US Dollar Index is mostly steady with crude setting new lows overnight.

Update – Morning Coffee Commentary:

Crop ratings this afternoon are expect to be steady with last week where corn was 70% good/excellent and soybeans at 62% good/excellent. This would remain above the 5 year average.

The estimate parade begins as private analysts release their estimates starting with FC Stone on Tuesday afternoon and Informa on Wednesday morning. USDA will release their numbers on Wednesday August 12.

On Friday Doane releases results of their annual crop tour pegging US corn yield at 163.3 bushels per acre and soybeans at 44.2 bushels per acre which would calculate total production of corn 326 million bushel less than USDA and soybeans at 92 million bushel under USDA’s last estimate.

Managed money funds were net seller across the entire grain complex last week. They sold a net 36,864 contracts of corn, 27,924 soybeans and 15,506 of wheat. Managed money is still net long 242,801 contracts of corn and 62,295 contracts of soybeans. They are almost even on wheat.

Bloomberg Commodity Index was down 10.16% in July which was the largest drop since Sept of 2011. The Index’s low last week was the lowest since March of 2002 and an 11.6% YTD decline.

The macro markets this week will focus on Friday’s July payroll report and whether the Chinese stock market can remain above the mid-July 4-1/2 month low. There is a need for ongoing Greek bailout negotiations to produce some quick results if Greece is to make its Aug 20 bond payment to the ECB.

Managed money funds were aggressive sellers in live cattle last week as they reduce their net long positions to only 27,466 contracts. Cash cattle traded 2.00 higher at 147 to 148. Packers may be reluctant buyers this week as they pull contract cattle to fill production needs. Beef demand is expected to pick-up in early August as retailers prepare for Labor Day featuring.

Lean hog futures are struggling with the product demand and large supplies compared to a year ago. Look for more choppy trade as we start the month of August.

Dressed beef values were higher with choice down .09 and select down .03. The CME Feeder Index is 215.95. Pork cutout values are 1.25.

Markets as of 5:15 AM CDT

  • Dec Corn   -5 1/2
  • Nov Beans -8 3/3
  • Sep Wheat   -5
  • Sep Soymeal -1.90
  • Sep Dlr     +.07
  • Sep S&P   -1.75
  • Sep Crude   -.76
  • Aug Gold   -2.20

Technical Chart of the Day

daily chart

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