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Closing Comments

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Closing Comments

 

Corn continued to move lower along with the rest of Ag, -4 ¾ (Dec). Today seems to be a broad-based, industry wide reduction in equities, with Crude and the stock market also down. Crop progress reporting showed corn harvest to be 83% complete, 8-9% behind last year’s pace. The market is still digesting the USDA report which is predicting an all-time record yield of 175.4 bpa nationally. A couple of positive news items included the USDA reporting a private sale of 133,096 MT of corn to “unknown” destination for 2017/18, while South Korea also picked up a cargo of 60K MT of U.S. corn.

 

Soybeans continued down the path of weak technical action, -6 ½ (Jan). Yesterday’s trade offered a trend-changing direction, with beans showing greater vulnerability to the downside. Soybean oil and soy meal also showed weakness today. One positive for all the grains is the currency relationship, as the Brazilian Real is up and the Dollar down, making U.S. export pricing more attractive on the world market. The NOPA crush report is tomorrow, with an increase expected from the September to October crush numbers. Harvest numbers showed soybeans 93% harvested, slightly behind the 5-year average.

 

Wheat found support in a sharply falling Dollar, as the winter wheats were: Chicago SRW +3 ¾ and Kansas City HRW + ½. Minneapolis spring variety lost ground, -4 ¼ (Dec). There is not much to get excited about in wheat, but the Commitment of Traders report showed funds having a larger short position than expected, which could be viewed as supportive as the market will run out of sellers at some point. Crop progress reporting showed winter wheat 95% planted, right in line with expectations, while winter wheat conditions were down 1% in the good/excellent category.

 

Live Cattle futures fell further, following the pattern of lower lows on the charts the past several sessions, -1.075 (Dec). Look for the Cattle on Feed report this Friday as well as Livestock Slaughter and Cold Storage next Wednesday for future direction.

 

Hogs had a large break to the downside, taking out closing below both the 100 and 200-bar moving averages on the way down to new areas of support below 60.000, -2.325 (Dec). Today, the deferred months also followed in-step, as Feb saw even larger losses, to near lock-limit down. Hogs need positive demand news, as short-term supplies are clouding the view.

 

Closing Market Snapshot  

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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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