Home Market Market Watch Closing Comments

Closing Comments

SHARE






[cid:image003.png@01D10A82.5645B450]

Closing Comments

US Federal Reserve starts its two day monetary policy meeting today with decisions to be announced at 1 pm central tomorrow. Analysts say there is almost no chance of an interest rate hike.

Iranian President Rouhani said he expects nuclear sanctions to be lifted by the end of the year.

Ag Secretary Tom Vilsack announced that beginning yesterday, nearly one half of the 1.7 million farms signed up for ARC or PLC programs will receive safety-net payments for the 2014 crop year.

Pressure on crude today as the market continues its concern around oversupply and limited storage space for refined products. US Congress continued to display their strategic competence by proposing the sale of 58 million barrels of crude from the Strategic Petroleum Reserve to help with budget issues. The sale would not take place until 2018 and would happen over six years – but the market still doesn’t like even the talk of such a proposal.

Corn

Weakness in crude oil, farmer sales and continued lack of global competitiveness weighs on Corn.

Some farmer sales are meeting the recent rally in corn as the western growing areas continue to look for room for bushels and eastern cash bids are working to draw ownership from farmers. The report of the Brazilian cargo bound for Wilmington NC adds to the bearish export competition sentiment in the corn market.

Mexican sorghum production has been plagued with a serious sugarcane aphid infestation that is resulting in reduced crop yields.

South African Weather Service said that an El Nino weather system that was forecast to bring drought for much of the southern hemisphere now looks like it will extend into Autumn. South African farmers are expected to plant 2.55 million hectares, the fewest number of acres since 2011.

Italian corn yields are expected to be sharply lower coming off an exceptionally hot summer. The Italian statistics agency is anticipating a 22 percent drop in production.

Floor sources suggest funds as sellers of 11,000 corn today.

The bottom of the recent uptrend channel for tomorrow’s trade is 3.78 Dec, ideally that will hold after today’s reversal. Bull spreads also lost ground today with Dec-March returning ¾ of a cent to the carry. For the near-term, Dec corn will face increased hedge pressure in the $3.90-3.95 area.

Soybeans

Soybeans higher on strength in meal but weakness returns to soy oil. Demand provides support.

Soymeal spot basis offers were steady to firm at processors in both rail and truck markets. Claypool IN offers rose $5 per ton while Sioux City is now back on-line bidding $20 under CBOT after a fire shut production for 10 days.

Talk out there of a March Soymeal sale to the Philippines is providing some support to the meal demand story in conjunction with Cuba’s purchase yesterday.

Soymeal, while not able to close on its highs, does seem to have run out of seller on its recent nine day sell-off. Support looks to have held for now in the $300 dollar range where it also did at the end of September. Resistance above the market remains around $320.

Wheat

Wheat gives up early session gains with Chicago continuing to gain on KC and MN.

Yesterday’s “short covering” rally hasn’t been coupled with a drop in open interest which would be common in true short covering rallies. There is speculation that the rise in price was not necessarily the reduction in short contracts, but the build or at least replacement of long contracts. The fund behavior through today’s session will be reported in this Friday’s Commitment of Traders and will provide more insight into the managed money buying and selling over the last five sessions.

The USDA said the US winter wheat crop was 83 percent planted and 62 percent emerged as of Sunday. They rated 47 percent of the crop as good/excellent compared to 59 percent a year ago.

Essentially, wheat is struggling to hold rallies on lack of supportive news – but selling dries up as December futures near 4.80. Today’s price action leaves the chart with a “shooting star” after a two day rally – a bearish signal at least to this current rally as buying exhaustion came to the market.

Chicago again gained on KC as December Chicago managed to close +1/4 while KC December lost 4 1/2. This leaves the spread at a December contract low of KC at a 21 ¼ cent discount to Chicago.

Livestock

Technical selling pressure cattle and feeder cattle futures while hogs deal with growing supplies.

As of midday, asking prices of mostly $142.00 live are now present in the Panhandle and Kansas. There are no bids yet, and trade is expected to hold until later in the week. The choice cutout is up $1.30 at noon, with the select up $0.30.

Fears are growing in cattle on the heavy cattle in feedyards and concern that the supply of beef will rise going into a winter at a time when many grocery stores promote purchases of pork and turkey, not beef.

Effective November 20, the CME Group will increase the weight ranges for its feeder cattle index. Beginning with the Nov ’16 contract, the weight range for cattle included in the index will be increased to 700-899 pounds from the current 650-849 pound range. The feeder cattle index reflects the sale of steers over a seven-day period in a 12-state region, with futures tracking the index as the spot trading month approaches its final settlement.

Cash hog prices in the Midwest on Tuesday traded steady to $1 per cwt lower due to seasonal increase in hog numbers and declining wholesale demand. Wholesale pork prices late on Monday declined for the three consecutive sessions to $85.36, mostly led by a $3.43 cost drop in ham.

Closing Market Snapshot

[cid:image002.jpg@01D110C2.29D21A30]

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

[cid:image007.png@01D10A82.5645B450] [cid:image009.png@01D10A82.5645B450] [cid:image013.png@01D10A82.5645B450]

Questions or comments? Contact us at 1-866-249-2528 or waterstreet@waterstreet.orgwaterstreet@waterstreet.org>