Kleist Comments

CLOSING AGS 7/31/14
CLOSING AGS 7/31/14

Cattle:
Comments: Sharply higher beef, yes again. Strongly lower Futures action suggesting that cash cattle will be lower this week though it seems counter-intuitive with lower showlists and ever-more beef gains.

Hogs:
Comments: Early rally seemed technically inspired with little fundamental behind it and hence, all it took was the cattle break to turn buyers cautious. Plus, the I/M and Western corn belt interior hogs were off $3.50 roughly in early trade.

GRAINS & OILSEEDS:
Corn: Weather is one thing but I still think the weekly export sales were the real problem today (see analysis of it in the morning comments).

Soybeans: Very light trade an mixed to generally a tad higher all session. Weekly export sales supported somewhat but weather forecasts seemed to limit rallies. By the way, looks like part of Russia’s response to sanctions is to ban beans and meal from Ukraine. Doubtful they’ll buy U.S.

Wheat: Another rally. Or a bottom or a bounce? Too early to tell but at least a “value” area posted after a very good weekly export sales report. On top of the market though is: IGC raises its global production forecast and will the U.S. continue healthy export sales at higher prices?

Thought I’d include this for hedging customers…………probably not a surprise.

10:51 EDT – Per-acre value for US farmland needs to contract or risk the development of an asset bubble, according to a report by agricultural lender Rabobank. Due to the recent sharp downturn in commodity prices, average gross revenue from Midwest row crop production this season and next is expected to drop below 10% of average land values, report said. “With the prospect for increasing interest rates and falling commodity prices, an adjustment is needed beginning in 2014/2015 to avoid the future development of an asset bubble,” bank said. It estimates that if corn prices in the long-term hover between $4.50 and $5.00/bushel, land values would need to decrease by more than 10% from current levels to regain balance. (jesse.newman@wsj.com; @jessenewman13)
(END) Dow Jones Newswires

July 31, 2014 10:51 ET (14:51 GMT)

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

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