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July Ends Sending Positive Signals

Published on: 11:20AM Aug 01, 2018

Good Morning! From Allendale, Inc. with the early morning commentary for August 1, 2018.

Grain markets are doing a bit of back and fill after Tuesday’s sharp rally. Tariff news and weather forecasts as row crops finish development continue to take center stage. Chartist are looking for confirmation of technical formations.

Corn and soybean futures closed out the month of July with a strong performance after a weak start. Dec wheat was 56 cents higher, December corn was up 15 cents and November soybeans were up 39 cents.

Chart highlights for November soybeans are they have retraced $.96 from the low and they have retraced over 38% of the move from high to low. The 50% retracement crosses at 9.43. December corn futures have now closed above the 3.80 level for 2 sessions, historically a positive signal. December wheat has potential a double top formation.

USDA June soybean crush is seen at 168.8 million bushels, oil stocks estimate is 2.272 billion lbs. which will be released after the close today.

INTL FC Stone is due to release their first estimates of U.S. 2018 corn and soybean yield & production later today around 3 p.m. CDT.

Funds were estimated to have been net buyers of 16,000 corn, 10,000 soybeans, 7,500 wheat, 4,000 soymeal and 2,000 soyoil on Tuesday.

German farmers intensified calls for around 1 billion euros ($1.17 billion) in special aid on Tuesday after crop damage from a drought and heatwave, but Berlin said it would wait for an August harvest report before making a decision. (Reuters)

Ukraine is expecting a record maize crop in 2018 at 27 to 28 million tonnes compared to 24.1 million tonnes last year. They are also expecting to increase maize exports to China this year by as much as 10% over 2017, due to the tariff war between US and China.

FOMC is expected to announce their decision on interest rates this afternoon, trade is expecting no change. Friday’s employment numbers will be very important to the economic situation.

Cash cattle had a few trades in the Cornbelt but not enough to establish a trend. Futures trade may affect the attitude of feedlots, however, packers profit margins will drive their need to keep chains rolling.

August live cattle futures were up $.95 for the month of July. The discount of futures to cash should provide support as we approach option expiration on Friday and first notice day on Monday. Chart support for the August contract is 106.80 with resistance at 110.67.

August lean hog futures closed $15.32 lower for the month of July. Can a new month bring in a change of attitude? The nearby hog contracts set new contract lows on Tuesday. The charts are signaling an oversold condition suggest a quick short covering rally could occur at any time.

Dressed beef values were mixed with choice down .45 and select up .40. The CME Feeder Index is 149.04. Pork cutout value is down .49.