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Closing Comments

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Closing Comments

 

Corn benefitted from short-covering ahead of the weekend as well as some positive rumors from the Orient, +6 ½ (Dec). With the holiday shortened week around the corner and harvest wrapping up, farmers do not seem to be in any hurry to sell out of their bins. There are strong signs that China has booked 5-10 cargoes of U.S. corn and maybe 12-18 cargoes of U.S. ethanol, according to AgResource. Is China becoming a more routine buyer of U.S. ethanol? In South America, Brazil is a little too wet and Argentina a bit dry, but the bigger concern is a stronger than usual La Nina pattern coming together that may impact later on.

 

Soybeans also found strength in La Nina uncertainty and dry weather starting to trend across Argentina. If this continues, the effect would be felt the most by soymeal. Also creating uncertainty, is the biodiesel mandate that the EPA is required to announce by the end of this month. Both of these factors helped to boost the market and stimulate buying activity of soybean contracts. Soybeans were up sharply in the January contract, +18 ½.

 

Wheat joined the other grains with short-covering heading into the weekend. The winter wheats had solid gains with Chicago +5 ¾ and KC +5, along with Minneapolis spring wheat finishing +5 (Dec). A couple positives for wheat include Egypt being an active buyer in the marketplace and Informa announcing their 2018 U.S. winter wheat planting estimate at 31.92 million acres which is down from 32.17 previously.

 

Live Cattle saw more selling and piling into shorts with investors positioning pre-report, -.700 (Dec). NASS will release the Cattle on Feed this afternoon, so look for results in Monday’s commentary. The expectation by traders is for placements to land somewhere between 107-112%, with growing supplies of feeders out into the April timeframe. There is an awfully lot of red meat available, and it will be a challenge for demand to keep up.

 

Hogs had a volatile day on the board, with a large bar to the upside early in the session only to be followed by a retracement and some buying exhaustion. Hogs are battling the same story of large supplies but a strong cash market. If cash can hold up, futures will likely come up into alignment before Dec expiration. Look for next week to provide clearer direction. Dec hogs +.550

 

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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