July 25, 2016

Wake Up Call

Crop Loss Weather Window Almost Closed

Good Morning! Paul Georgy with the early morning commentary for July 25, 2016.

Grain markets are higher on bargain hunting after last week’s sharp losses. The US Dollar index and crude oil are lower.

Weekend weather and short-term forecasts would have to be considered supportive to row crops. However, the 6 to 15-day period has above normal temps across the Midwest.

Crop conditions report this afternoon is expected to show some downgrading due to the heat last week.

CFTC Commitments of Traders Report showed managed money funds were net sellers of corn last week of 22,064 contracts making them net short 13,362 contracts. They sold 21,715 contracts of soybeans remaining net long 137,692. They increased their record net short position in wheat by 1,938 contracts to 116,606.

Chart watchers are looking at the lows made on Friday in grain markets as key support levels. November soybeans were down 69 cents last week; December corn was down 16 ½ cents while September wheat was up ½ cent last week.

Funds were estimated to have been net sellers of 12,000 contracts of soybeans, 3,000 soymeal and 7,000 soyoil. They were net buyers of 6,000 wheat contracts on Friday.

Macro markets this week will be focused on the FOMC meeting where trade will be looking for any signs of a rate hike. This is an active economic report week with Friday's Q2 U.S. GDP report plus the peak week for Q2 earnings with 194 of the SPX companies scheduled to report. The Democratic National Convention is this week.

Cattle-On-Feed report was released on Friday at 2:00 pm CT. Trade average estimates were: On Feed 101.6%, actual 102%, Placed 106.4%, actual 103% and Marketed 109.5%, actual 109%.

Active marketing pace during June and the first few weeks of July should help tighten supplies of market ready cattle down the road.

Beef in cold storage was a build of 5 million pounds compared to a normal drop of 13 million pounds during June.

August cattle futures are indicating oversold which could spur a price recovery.

Last week managed money funds were net sellers in lean hogs and net buyers in live cattle.

Monthly Cold Storage report showed pork stocks at the end of June totaled 585.884 million pounds. This number represents a 29 million lb. drawdown. The five-year average change from May to June is a drop of 49.9 million pounds.

The sharp decline in lean hog futures last week has technical indicators showing over sold.

Dressed beef values were lower with choice down .61 and select down .25. The CME Feeder Index is 139.22. Pork cutout values are down .43.

Markets At-A-Glance – 5:10 AM

  • Sep Corn    +2 3/4
  • Sep Beans   +3
  • Sep Wheat   +7 1/2
  • Sep Soymeal +2.20
  • Sep Soy oil -.31
  • Sep Dlr     -.20
  • Sep S&P     +.50
  • Sep Crude   -.27
  • Aug Gold    -7.20

Technical Chart of the Day

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