Thursday markets were mixed from the outside equities to the commodities. China made a historic purchase of corn at 1,937,000 Metric Tons for the 2020/2021 marketing year. Jeff Peterson with Heartland Farm Partners believes this shows that Chinese demand is strong and will likely continue barring issues between the worlds largest economies. However the trade is still focused on how big the US crop will likely be and is cautious to shake loose short positions.
Peterson also highlights how important currencies are currently to the market. The US Dollar index has continued to decline, but that is partly due to a quickly rising Euro. The US Dollar in comparison to emerging currencies like the Real and Ruble is still relatively strong. That means that the biggest competition to US ag commodities still has some competitiveness issues.
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Mike Zuzolo, Global Commodity Analytics, joins the Fontanelle Final Bell after a mixed Tuesday trade. Grains all moved lower following the latest crop progress update from NASS. Zuzolo is still looking at dry conditions in Illinois, Iowa, Ohio and Michigan. So far rains have been beneficial and timely, but the latest forecast models show that dry conditions could continue to persist and the corn belt may miss it’s next timely rain.
Aside from the supply side of the equation there is still more demand to draw up. In the second segment of Final Bell Zuzolo reveals his latest data on China and the flooding they are experiencing. This actually translates into not only demand for grains, but protein as well. Zuzolo wraps up the market commentary with a look at the cattle market and what it means for the board to continue running premium to the futures.
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Heather Ramsey, ARC Group, joins the Fontanelle Final Bell to kick off the last week of July. Grains ended mixed with soybeans higher. Ramsey touches on the fundamentals that will help soybeans continue their move higher. However looking at the charts upside potential is limited. Ramsey also discusses how increased South American production decreases the chances of a weather rally in the US.
Ramsey also looks at how important weather is to the trade with pollination past for most of the countries corn crop. It looks like Chicago is thinking the corn crop is made so now they will turn their attention back to demand. Money flow may also be eyeing the commodities with a near record high in Gold.
Markets will end mixed on Friday. Corn and soybeans were higher in the grain complex. Both Chicago and Kansas City wheat futures closed in the red. For livestock live and feeder cattle closed in the green. Lean hogs were mostly lower.
Sue Martin, Ag and Investment joins the Fontanelle Final Bell on Friday. Martin discusses the reasons why wheat lost it’s steam from midweek gains. Martin includes the fact that US wheat is at a price disadvantage from other global producers. As for corn and soybeans there are several technical signals that are starting to move into place that could give support a bullish weather move. Martin relays though that her forecasting services are reporting decent chances for moisture after the current heat streak.
Martin rounds the conversation out in the livestock market. Cattle are also susceptible to heat stress, but the North may be on current enough supplies that cattle will weather the heat in good condition. Martin also highlights that cattle marketing is reflecting an older practice where cash was discounted to the futures rather than premium.
Commodity markets, including grains, fell in with the risk off sentiment that developed across the entire market complex Friday. Brain Splitt with Ag Marketing.Net weighed in on how rising cases of Covid-19 may impact more than the equity markets.
Energy markets are at risk as states like Texas pause their reopening. That translate to harm for corn demand. Splitt is quick to point out though that there is one demand factor that could be improving for corn and that is feed demand. As DDGS and other feed ration ingredients became more scarce corn filled in more gaps livestock feeders.
China is back in the market for US soybeans on Friday, but their total demand picture is still fuzzy. A weather story would definitely help bean bears, but time for the story to develop is starting to dwindle in Splitt’s opinion.
Listen to the full commentary here: