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Closing Comments

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Closing Comments

 

Corn was able to catch a bit of soybeans’ momentum, +2 ¾ (Dec). The USDA reported weekly export sales at 1.046 MMT, on the high end of expectations of 750K-1.1 MMT. Much of this was to Mexico, with the rest made up of sales to Colombia, Japan and Korea. For the crop year, U.S. corn exports are down 38%, which is somewhat expected due to the large South American crop. September futures went off the board today, leaving a gap in the continuation chart – will this pull December futures down to fill the gap? The market is now turning to the rolling combines for future direction, as hard yield numbers are needed to bring clarity to some of the controversy that has surrounded the August and September USDA reports.

 

Soybeans attained solid gains on aggressive fund buying, +15 ½ (Nov). The market appears to already have processed much of the bearish news, and is ready to move on. USDA weekly export sales did not disappoint, coming in at 1.6 MMT vs. estimates of 1.0-1.25 MMT. The USDA reported a private sale to China today of 198K MT of soybeans for 2017/18. Soybean planting is underway in N Brazil, and weather will continue to receive more focus going forward. Brazil is experiencing dryness that is expected to persist in the near-term, while Argentina is overly wet. Both of these potential scenarios warrant monitoring. November soybeans are quickly approaching major resistance in the 9.80 area. Keep an eye on whether beans are able to pop up through this ceiling and into new trading strength.

 

Wheat was not able to sustain the momentum of the past couple of days, finishing negative across the complex. There is not much fresh news to excite traders at this time. But, wheat may be able to feed off of the positive gains of corn and beans, if they are to continue. The USDA announced weekly export sales of wheat at 316,700 MT, on the low end of expectations of 300K-600K MT. “Unknown” was the largest customer, followed by Colombia and Turkey, with Mexico cancelling 32K MT. Strategie Grains upped their European wheat crop predictions from last month by 1.5 MMT. France is expected to have excellent quality wheat, the Baltic and Central European region with adequate quality and declining quality from Germany and Poland. Chicago SRW – ¼, Kansas City HRW -2 ¼, and Minneapolis HRS –11 ¾ (Dec).

 

Live Cattle, like hogs, seem to be searching for a short-term low, -.625 (Oct). Once this happens, it is likely the nearby futures contracts will lead the way higher. Strong retail and packer margins have provided strength to the market. Carcass weights will be released today and this will be monitored closely, as it is thought at some point weights will catch up with last year, which will only add tonnage to already burgeoning supplies. Look for beef exports to continue to remain strong.

 

Hog futures have been under seasonal pressure of late, -.550 (Oct), while February was able to close higher. Is a short-term bottom on the horizon? Long liquidation has been the topic recently, as increasing hog weights and the decline in the cash market have added weakness. The increased capacity added with new plants coming online in the last week should help provide a measure of support.

 

In Other news, Ag Secretary Sonny Perdue has promised special assistance to producers of crops and livestock who suffered losses as a result of Hurricanes Harvey and Irma. The FSA is authorizing emergency procedures in certain situations to assist, with a Presidential Disaster Declaration. It is crucial for all farmers affected to keep meticulous records of losses as well as other “extraordinary” expenses that resulted from lost supplies and increased transportation costs.

 

Closing Market Snapshot  

 

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.

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