Improved Rainfall Forecasts Put Pressure On Grains To Start The Week

Corn – Improved rainfall chances, not much in the way of new/ shocking Russian headlines

↓ Last night and this morning’s maps showed improved chances for rain in the 10 day outlook

↓ There were a few new attacks by Russia over the weekend but nothing big enough or shocking

enough to count as a new scare headline for trade in overnight

↓ Removing Headline trade and going back to the core fundamentals even if the USDA lowers yield by 6

bushel more still project a fall price of $4.50

↔ There are signs that the ARG green peso deal is resulting in more ARG corn sales, limiting US sales

↔ On the last bounce funds covered all short positions and are now “flat” at +27K

Beans – Morning maps showing much improved rain for the first 10 days of August, exports improved

↓ Morning maps are showing improved rainfall chances for the first 10 days of August and the

temperature set back including mostly normal to some areas of below normal

↔ Both weekly and 8 AM exports have improved recently but much more is needed with current

exports still running far behind last year and the five year average pace also behind USDA expectations

↔ A 3 – 4 bu cut in final yield suggests $14, a 1 – 2 bu cut suggests $13.50, trend yield suggests $13

↔ Funds bought on the recent bounce but nowhere near as aggressive as corn where in that market

they bought 74K and in beans they bought 25K, currently long 121K or 48% of record

Wheat – There were new Russian attacks over the weekend but nothing large scale for influence

↓ Overseas wheat traded lower overnight not affected by Russian headlines, with overseas we trading

lower US wheat was quick to follow in overnight trade

↔ It is difficult to tell where fair value is for December CHI but one chart level may suggest around 680

↔ Recent exports have improved for corn/beans but so far not wheat

Cattle – Most cash trades that occurred last week were late on Friday, $1 lower NE, $4 lower KS/TX

↔ Friday’s PM BB was choice -0.86 select -2.22 packer BE at 184.00, packer cushion $1.82

↓ Most reported cash trades from last week occurred after the futures closed on Friday with reports of

$1- $2 lower in NE at 187 – 186 and $4 lower in KS/TX at 178

↓ As expected, Friday’s COT report showed that funds were sellers of 11K, still long 104K or 67% record

↔ We would expect last week’s average cash trade to be $2 to $4 lower which will improve packer

profitability but still look to be a net loss on all cash purchases from last week

↓ Would expect to see at least light fund pressure again this week

Hogs- Carcass Cutout Values 113.47 Change: (-1.26)

Primal Loin 99.81 (-1.88) Primal Butt 110.25 5.74 Primal Picnic 79.30 (-1.73) Primal Rib 113.61 (-1.50) Primal Ham 96.45 (-1.90) Primal Belly 216.01 (-3.53)

↔  August lean hog futures ended with the week with a +2.15 gain and a new high for the two month uptrend. The long awaited top for cash hogs may have finally come but it is not falling yet.

↔  The 39 day rally in cash hogs, 34.61 in total, may have peaked on Tuesday. Wednesday’s cash hog trade, the one day contribution to the two day weighted average Lean Hog Index, was -0.14

↔  While we do fell this week was likely the seasonal top for the year, the trade is reconsidering how quickly it expects cash hogs to decline. August futures, with expire to the Lean Hog Index where it is on August 14, is reigning in its discount to current cash.

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