Grains and Oilseeds: September corn closed at $8.10 per bushel, up 16c on continuing concerns of crop damage due to the extreme heat and dry weather in the growing areas. We could see additional reports of damage and supply concerns in the future but sharp corrections could wipe out profits for those whose "timing" is out of line. September wheat closed at $8.91 ¼ per bushel, up 26 1/4c tied to weather and concern that the lightest Indian monsoon in three years could reduce global production. That is a factor in addition to dry weather in the U.S. Take some profits if available, the markets may have gone too far too soon and are set for a correction. November soybeans closed at $16.28 ¾ per bushel, up 12 1/4c and in the middle of the recent $16.91 high and $15.48 low. We remain cautious after having been bullish for soybeans for months. While additional price gains could take price higher, use stop protection on new purchases and raise trailing stops on existing positions.
Meats: December cattle closed at $1.27275 per pound, down 4.25c and remains rangebound. The U.S. drought is prompting farmers to sell more animals to avoid feed price losses and that provides additional supply. Stay out for now but bear in mind the long period of time necessary to rebuild herds once the current feed cost concerns and weather returns to normal. December hogs closed at 73.95c per pound, down another 1.975c on continued long liquidation from recent highs around 80c. As with cattle, high feed prices have farmers pushing animals to slaughter increasing supply with slackening demand.Stay out for now.
Coffee, Cocoa and Sugar: September coffee closed at $1.7380 per pound, up 2.15c as growers are keeping product off the cash market and hedging in the futures market instead. The weak dollar also a factor in support for coffee after recent weakness from the $1.90 level. We prefer the sidelines as a global economic contraction could reduce overall demand. September cocoa closed at $2,398 per tonne, up $29 on good buying tied to strong sterling and the weak dollar. Cocoa appears to have broken out of its recent range and could challenge the next resistance level of $2,500 on a technical basis. However, shrinking global economies could factor into the strength. Any new buying should be accompanied by stop protection. October sugar closed at 22.00c per pound, down 4 ticks on profittaking after briefly touching 24c in late July. Concerns that the Indian sugar cane crop was hurt by the worst monsoon in three years that could restrict exports. We prefer the sidelines in sugar for now until some clarity emerges as to basic supply/demand factors.
Cotton: December cotton closed at 73.94c per pound, up 2.97c tied to tightening U.S. supplies and increased demand. We like cotton from here after recent sideways price action.