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Closing Comments

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Closing Comments

 

Corn benefited from a strong day in beans, + ¼ (Dec). Trade tends to be lighter pre-holiday, and there is little fresh news to spur action. Getting some attention is chatter of a high probability of a La Nina pattern forming, which typically leads to dryness in the Southern hemisphere. EIA Ethanol numbers were positive overall for corn this week, showing production up 1.90% compared to last week and up 5.92% over last year. However, ethanol stocks continue to grow, up 1.86% compared to last week and 15.54% over last year. Corn used for ethanol is running at a solid pace, estimated at 111.77 million bushels, well over the 104.231 million bushel weekly bushel average needed to meet the USDA yearly estimate. Healthy production margins are encouraging U.S. producers to up their game.

 

Soybeans followed strong seasonal trends that normally give a boost the day before Thanksgiving, +8 ¼ (Jan). Soybeans and soymeal were on the receiving end of active buying by funds, while soyoil trended negative. This was due to traders unwinding their long soyoil/short soymeal spreads, according to AgResource. South American sellers have been opening their grain bins to selling, as the relationship of the Brazilian Real to the Dollar is favorable. Normally this time of year, Brazil is starting to run low on supplies to offer for sale, but due to their record harvests last season, product is readily available. Given a choice, Chinese crushers prefer the higher quality Brazilian soybeans.

 

Wheat was mixed, giving back some of the gains achieved yesterday. Chicago SRW -2, Kansas City HRW + ¾ and Minneapolis HRS + ¼. The concern over radiation in the Russian crop seems to be in the rearview mirror for now, and likely will not have much of an impact on global grain production moving forward. This was not a new story, as it had started to circulate in late September. Russia will need to explain the radiation leak at some point, or it could have ramifications down the road.

 

Live Cattle gapped higher at the open and found support in the stocks report today, +1.075 (Dec). The Cold Storage report released by the USDA showed total red meat supplies in freezers for October was down 1% from September and down 2% from last year. Total beef supplies were up 2% over September but down 5% from last year. Next week it is expected that cash cattle trade will continue steady/firm as packers up production in preparation for the Christmas holiday season.

 

Hogs were able to reverse course after a bearish engulfing bar on the charts yesterday, +2.125 (Dec). The Cold Storage report was favorable to trade, showing frozen pork supplies down 3% from September and down slightly from last year, according to the USDA. However, stocks of pork bellies were up significantly, 54% greater than September and up 58% over last year.

 

The Chicago Board of Trade will be closed tomorrow for Thanksgiving and will have abbreviated hours on Friday, opening at 8:30am and closing an hour early.

 

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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