Morning Comments-Monday July 25, 2016

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Commodity Market                                                                       Monday July 25, 2016
Last week’s markets were SHARPLY lower for corn and soybeans.  Wheat closed higher.  The energy markets were lower, financial markets higher and the Dollar Index was higher, closing the week at $97.46.  The US bond market continued to rally with the 10 Year Bond yielding 1.57% and the 30 year bond closed at 2.28%.  For the week, SEP Corn was 17.25 cents lower, closing at $3.35, AUG Soybeans lost 66 cents, closing at $10.065 and SEP wheat was 0.5 cents higher, closing at $4.2525.  For the week, Crude Oil lost $1.76, closing at $44.19.  The DOW gained 55 points, closing at 18,571 and the US Dollar Index closed at $97.46, up $0.84.  August Heating Oil futures closed at $1.3568, down $0.0680 for the week.  CBOT closes in the NOV-DEC contracts were $3.4175, $9.8825 and $4.5025 for 2016 DEC Corn, 2016 NOV Soybeans and 2016 DEC Wheat, respectively.  SEPTEMBER 2016 soybeans traded 69.75 cents lower for the week and settled at $9.9875.  MARCH 2017 corn closed at $3.515, down 14.75 cents for the week, MAY 2017 corn closed at $3.57.  MARCH 2017 wheat gained 2.5 cents, closing at $4.7525, MAY 2017 wheat closed at $4.8725, JULY 2017 wheat closed at $4.9475.  The Baltic Dry Index closed at 726, down 19 points from last week’s 745, a new all-time low for the index was set on 2-12-16 when the index hit 290, establishing a new low for the index stretching back thirty plus years.  The Baltic Dry Index is up 51.88% YTD.
We definitely are in a weather market and it appears that for now the high-pressure ridge is breaking down and moving back into the High Plains.  We received more rain than was expected last week and we are forecast to receive a fair amount of rain this coming week.  The rains have reduced the detrimental effect of high heat and they have in many cases lowered the high temperatures.  Many analysts are now starting to talk about the possibility of a national corn yield in the low 170’s per acre.  High ratings for soybeans at this time do not insure a high final yield.  Most analysts agree that August is the month that makes or breaks soybean yields.
British real estate investment trusts are grappling with excessive redemption requests and in some cases; they have frozen investor accounts and refused to make redemptions. The last time we saw market activity like this was just before the 2008 financial crisis.  Let’s hope that this issue remains in the UK.  The US dollar was mixed-stronger and the US Treasury Bonds were very strong with the 10-year bond closing at 1.57% yield and the 30-year bond at 2.28%.  Mortgage rates were stable with a 15-year mortgage quoted at 2.69% and a 30-year mortgage at 3.43%.
The CIF markets are active for corn and soybeans. Corn exports have moved up and wheat exports continue to be soft, with the off-spec HRW wheat taking over the damaged wheat and feed-wheat markets.  August corn barges are (71 bid – 75 ask) and September corn barges are (76 bid -82 ask), October corn barges are (77 bid- 81 ask), October soybean barges are (83 bid-87 ask) and SEP wheat barges are (45 bid-50 ask) and OND wheat (55 bid-80 ask).  The drop in October barge freight has increased interior basis bids.
Spec funds made significant changes to their final positions this week. Significant long reductions in soybeans and soybean meal combined with short selling in corn pushed the markets lower in corn and soybeans.  Specs removed their long position over the last two weeks and added 30,000 contracts to their short corn position to create a short position of 47,000 contracts net short.  Spec funds removed 20,000 contracts from their long bean position to make it 89,000 contracts long.  The Specs removed 12,000 contracts from their short wheat position of 115,000 contracts short.  The Specs finished the week, long 48,000 contracts of Soybean Meal.  August Soybean Meal fell this week to close at $346.70, down $32 per ton from two weeks ago.  Richard Brock and Associates acknowledges that a severe drought could still develop over the next 4-5 weeks and change things, but he states that based on 6 million additional corn acres, planted early and in generally good condition could continue this major selloff in corn.  He also states that the current soybean price levels are tenuous and feels that they could trade lower again.
Several major foreign currencies were mixed versus the US Dollar. The Euro finished the week at one Euro per $1.10 US$ (unchanged).  The Japanese Yen finished the week trading at 106.13 per US Dollar (down 2.01).  The Russian Ruble finished the week trading at 64.79 Rubles per US Dollar (down 0.64).  The Brazilian Real finished at 3.28 per US Dollar (up 0.01).  The Argentine Peso closed at 14.90 (down 0.08).  The Canadian Dollar finished at 1.31 per US Dollar (unchanged), the Mexican Peso at 18.53 per US Dollar (up $0.03) and the Chinese Yuan finished at 6.68 per US Dollar (up 0.01).  You may want to consider a marketing plan that gives you some flexibility, but also protects you from a drastic drop in soybean prices going forward into 2017 and 2018.
The Cattle on Feed Report released Friday afternoon was somewhat Bullish. The Cattle on Feed number was 101.2% of last year versus a trade estimate of 101.6%, Placements were estimated at 103.0% versus the trade’s estimate of 106.4% and June Marketings were estimated at 109.4% versus the trade estimate of 109.0%.  Beef and Pork stocks are up, so maybe this positive Cattle on Feed Report will put a Bullish tone back into a much-oversold market.
Live Cattle futures were lower for the week losing $0.75 to $0.95; Feeder Cattle were sharply lower, and Lean Hog futures were $2.10 to $2.65 lower.  August Live Cattle closed at $109.95, down $2.28 and October closed at $108.08, down $4.25.  August Feeder Cattle closed at 137.20, down $6.25 and October Feeder Cattle closed at $134.80, down $6.68.  Lean Hogs were lower in the majority of the options in the Lean Hog market.  August closed at $75.28, down $2.65 for the week.  Cash Hogs are called steady to $1 lower on Monday and Cash Cattle are called steady to $2 lower after late week trades at $189-192 in the beef and $115-117 live.  The Pork Cutout finished the week at $88.48, down $0.48 for the week.  Beef Feedlots are asking $120-122 in the South and $195-196+ in the beef after seeing some offers late week trade at $189-192.  Choice Beef closed at $200.36, down $2.12 and Select Beef at $189.96, down $2.42 for the week. Feeder Cattle traders and producers may benefit from the prospect of more than adequate feed grain supplies for the remainder of this year and well into next year.  The biggest risk to Feeder Cattle prices is the possibility of a summer drought that dramatically increases feed costs is rapidly fading away with every rain shower and additional day without extreme heat in the Corn Belt.
Check out our Daily Grain Bids (updated every 10 minutes during the trading session) by clicking on: www.buchheitagri.com/biehle-grain-bids/  or www.buchheitagri.com/morehouse-grain-bids/  or feel free to call us at 800-622-7937 (ask for Katlyn, Eric or Dave) or call 573-667-9921 or 573-768-0489 and ask for Shon.
Call us for help with marketing decisions or help in preparing crop programs!  A DP program for those producers wanting to wait for a better day in the markets is available.  Check our website or call us for quotes on DP programs.  We can help develop a marketing plan and a floor price program.  Call Katlyn, Chad, Eric or Dave at 800-622-7937, Shon at 573-667-9921 or 768-0489.
We have updated our test plot results on our website.
You can check out our 2015 corn yields and some 2014 soybean and corn yields at:
Be sure to check out our website at: www.buchheitagri.com and see the marketing information available.  If you scroll down on the front page you will find our market info page supported by AgriCharts.  If you examine the left hand side of that page you will discover the options that allow you to create price graphs or charts and also to check on historical spread information.