Grains and Oilseeds: September corn closed at $8.24 ½ per bushel, up another 16 3/4c on Friday posting a one day 2.07% gain. The ongoing hot dry weather is creating crop damage and there is no way of forecasting a "top" so whomever is not in this market, we suggest the sidelines. September wheat closed at $9.43 ¼ per bushel, up 8 1/4c or 0.88% and is reaping the benefit from the adjoining corn and soybean pits. Traders use other commodities in a group to hopefully mitigate any losses from being on the wrong side and this could be one of those instances. Stay out of wheat for now. August soybeans closed at $17.57 ½ per bushel, up 23 3/4c but our recommendation over the past months has been the November contract which gained 34c to close at $16.86 ¼. The continuing drought with no sign of relief is "cooking: the U.S. grain belt and could cause additional crop damage pushing prices even higher. We now suggest, to those who have followed our recommendation of long soybeans, to take some profits "off the table". We co not suggest adding to positions since sharp corrections can occur at any time. On setbacks for the November contract of 30 to 50C, we would look once again to the long side. We see no letup to the current drought.
Meats: August cattle closed at $1.17950 per pound, down a penny as animals are moved to market due to heavy feed costs prompted by the drought in the growing areas. We prefer the sidelines but should herds decline further than the decline in demand would allow, we could see prices stabilize at some point. For now keep a watchful eye on inventories and feedlots. August hogs closed at 93.7c per pound, up 650 on shortcovering after hitting a low of 88.65c on July 18th. We prefer the sidelines in hogs even as "barbecue season’ usually means added demand. With the extreme heat around the country, that reasoning may not produce bullish results.
Coffee, Cocoa and Sugar: September coffee closed at $1.8695 per pound, down 2c on concerns that the unseasonable rains in Brazil prevented farmers from harvesting their beans and raised concern over the crop’s quality. We had liked coffee from the $1.75- $1.78 level but would now move to the sidelines. September cocoa closed at $2,229 per tonne, down $1.00 and remains rangebound between $2,100 and $2,300 per tonne. We prefer the sidelines. October sugar closed at 23.92c per pound, up 67 points or 2.88%, its highest settlement since April 12th. The gains can be attributed to the delays in shipping from Brazil. We could see further price gains but any new purchases should have stop protection applied.
Cotton: October cotton closed at 72.08c per pound, up 27 points but has failed to participate in the concerns prevalent with the grains or soybeans. With China cutting back on purchases of raw materials, cotton is one of the "victims" of their austerity. We prefer the sidelines.