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Closing Comments

 

Corn received welcome bullish news from the Quarterly Stocks report, +2 ¾ (Dec). September 1st stocks were pegged at 2.295 bbu compared to average estimates of 2.346 bbu. Last year was at 1.737 bbu. Because the market is oversold with managed funds short an estimated 145,000 corn futures and options contracts, this triggered a positive correction, as Dec corn reached a high not seen since September 12th. Next up will be the all-important October 12th USDA Supply/Demand and Crop Production report.

 

Soybeans also received supportive news from the USDA report, as trade estimates as of September 1st were for soybean stocks to be at 339 mbu, while the USDA weighed in today at 301 mbu. This compares to 197 mbu last year. If yields disappoint as growers get into the later planted crop, the trend could stay up. There were no new export sales announced today, but it is estimated China still needs about 6.0 MMT of beans for the Nov-Dec timeframe. Next week will feature more harvest data, and traders will be positioning for the Oct 12th USDA report. November soybeans finished +8 ¾.

 

Wheat was the surprise of the grains, as many thought the spring wheat would be the bull in the fight. However, the USDA September 1st report showed wheat stocks at 2.253 bbu vs. the average estimate of 2.203 bbu. All wheat production was pegged at 1.741 bbu, which was also above estimates of 1.724 bbu. Spring wheat stood out the most against expectations, as it overwhelmed average estimates of a harvest of 384 mbu with 416 mbu, in spite of reduced acres. Harvested spring wheat acres were trimmed back from last report’s 10.5 million acres to 10.15 million acres. Chicago SRW -6 ¾, Kansas City HRW -10 ¼, Minneapolis HRS -21 ¼.   

 

Live Cattle showed indecision today, settling on a modest gain, +.125 (Oct) and +.200 (Dec). December cattle was able to find support at the 100-bar moving average. The growth in the meats has been steady, and cattle are being slaughtered at an impressive rate, with combined steer and heifer kills totaling 519,863 for the week ending September 16th, the largest one week total since July 2013, according to AgResource.

 

Hogs came out of the Hogs & Pigs report unscathed, with both Dec and Feb breaking out to new highs before retreating modestly at the close, +1.675 and +1.700. October had a small decline, -.150. The report was in line with expectations across all three categories consisting of all Hogs and Pigs, Kept for Breeding and Kept for Market. The hog herd as of September 1st is the largest on record since the government began keeping track in 1988. Look for further direction next week and if hogs are able to keep momentum to the upside, in spite of large supplies weighing on the market. It is expected the hog/pork industry will continue to expand in 2018.

 

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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