Market Closes - August 1, 2014

Posted on Aug 1, 2014
Corn and soybean futures were weighed down by the expectations that beneficial rains will arrive by mid-week. Corn futures set new contract lows today. The spec funds are likely still long Corn futures so have lots of selling power. Although November/Jan/March Soybeans didn’t make new contract lows today, the September contract did. The Nov-Mar contracts are sitting right on chart support. A sharp drop in soybean oil futures to new contract lows also hurt soybean futures.

Sunday night’s updated rain forecast for first half of August will be key to price direction. Then attention will turn to Tuesday’s USDA Crop Production Report and updated WASDE carryout forecasts.

Normal to above-normal moisture chances are covering more of the Corn Belt in the 8-14 day forecast. See maps here. Wheat futures closed higher on short-covering as some export business is open to US origin and the Russia/Ukraine situation does present some risk to that wheat supply.

In follow-through to Thursday’s huge losses, Live Cattle futures closed lower but well off the day’s lows that were set mid-morning. Futures seemed to recover after cash cattle and beef traded with minimal losses. Choice beef dropped .53 to 263.13 and Select fell 2.48 to 258.12/cwt. Feeder Cattle futures also recovered strongly from early losses.

Lean Hog futures closed mixed but also well of the day’s lows. The trend is down and traders are leery of demand keeping up with the seasonal increase in slaughter that should begin soon – depending on the PEDv effect from last winter. The FOB Plant Pork cutout dropped 1.71 to 127.32/cwt.

This chart shows why the number of hogs coming to market has been down. However, the PEDv effect will soon begin to decline in conjunction with a normal seasonal increase in hog slaughter. This helps explain the recent weakness in hog futures and the $15/cwt discount the October LH contract has from the nearby August LH contract. The big question is will the chart pattern be similar for the 2014/15 Winter since PEDv is considered worse in cold temperatures.

U.S. equity indexes fell sharply this week with SP500 having its worst weekly loss since 2012. For the week, the SP500 dropped 2.7 percent and the DOW fell 2.8 percent. Treasury yields also dropped sharply after rising Thursday. Today’s disappointing jobs report and higher unemployment rate reduced investors’ fears of the Fed Reserve raising rates sooner than expected which Thursday’s reports generated.

Corn Sep -4 352; Dec -5 362; Dec’15 -5 406 Bean Aug -9 1215; Sep -26 1073; Nov -23 1058; Nov’15 -13 1065 Meal Aug -4 387; Oct -7 345 Oil -66 3545 Wheat Sep +4 534; Jly unch 596 (594-604) KC +7 633; MGE unch 616 Oats -4 351 Rice -19 1279

LC Aug -62 15730; Dec -167 15642; Apr -110 15595 FC Aug -40 22027; Oct -142 21960; Mar -87 21010 LH Aug unch 11802; Oct -35 10282; Feb +55 9060 Milk Aug +7 2151; Sep +23 2159

US$ -.15%

Dow -70 16493 SP -6 1925 NAS -17 4353 Tran -21 8121 VIX +.08 17.03

WTI -48 9769 Brent -134 10468 Gas -6 274 NG -4 380 HO -2 287 Eth +1 200 Gold +12 1293 Slvr -8 2033

2-yr -.063 0.476% 5-yr -.098 1.666% 10yr -.062 2.496% 30yr -.031 3.282%

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