Home Market Market Watch Closing Comments

Closing Comments

SHARE

cid:<a href=image009.jpg@01CE6CE4.660D8B30“>

 

Closing Comments

 

Corn got a surprise from the USDA that few were expecting, with a bump in the yield estimate to a record 175.4 bpa from 171.8 bpa in the October report with production of 14.578 bbu compared to 14.280 bbu. This pushes U.S. ending stocks to 2.487 bbu from 2.340 bbu, and global ending stocks from 201.0 MMT to 203.9 MMT. States with notable yield increases included IA and IL +6 bpa and ND and IN +8 bpa. While the market was expecting an increase, the announced number resulted in a collective gasp, and it was reflected on the charts, -6 ¾ (Dec). Corn exports were left unchanged. It leaves one to wonder if a 180 bpa is around the corner if the country were to experience an ideal growing season?

 

Soybeans were unchanged from a yield perspective at 49.5 bpa. The U.S. production number saw a slight decrease from 4.431 bbu last report to 4.425 bbu, while U.S. ending stocks declined from 430 mbu to 425 mbu. However, world soybean stocks were up from 96.1 MMT to 97.9 MMT, influenced by a 1 MMT increase of the Brazilian crop. Soybean exports were left unchanged. Soybeans along with the other grains will likely trade in a restricted price range, as the market awaits news of South American weather heading into February. January beans -13 ½.

 

Wheat was the only grain with a modest amount of bullish news as both U.S. and world ending stocks were reduced on the balance sheets. U.S. ending wheat stocks are estimated at 935 mbu compared to 960 mbu in October, while world ending wheat stocks are projected to be 267.5 MMT compared to 268.1 MMT in the last report. Wheat exports also got a boost, as they were increased by 25 mbu to 1.00 bbu. Chicago SRW +2 ¼, Kansas City HRW +1 ½ and Minneapolis HRS +3 ¼.

 

Live Cattle gapped lower to start the session and showed indecision thereafter, finishing –.450 (Dec). The storyline has changed little throughout the week as the market is extremely overbought and speculators have shed some long positions. However, boxed beef values have held up well, closing 49 cents higher yesterday. Stay tuned

 

Hogs made it seven consecutive sessions in the red, as the December contract led the way down -.375. According to Hightower, there has been a jump in average weights which confirms the slowdown in packer demand and it is adding to the overall tonnage that will need to be absorbed by the market. The USDA is predicting record 4th quarter production, up 5.8% from last year, but last week’s slaughter was actually down 3.1% from last year. Packer demand will need to increase in order to stop the bleeding.

 

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.

www.waterstreet.org 
or 1-866-249-2528