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Midday Update

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Midday Update

* Overnight caution turned into renewed optimism this morning as U.S. trade desks opened. The dollar is trader lower once again on expectations that we will not see a rate hike this year and may not see more than one rate hike until 2017. That’s attracting money once again to the major commodity indices, which are starting to boast more positive chart signals after posting multi-year lows this summer. Crude oil is up more than $2 per barrel and poised to test the spike top posted on August 31.

* Trade volume in the ag commodities is said to be quite thin at times. Many traders are simply waiting to get a better handle on the size of this year’s crops, of which USDA will weigh in on come Friday. That thin volume makes it easier for movement in the major commodity indices to push grain contracts around, which at this point is positive. The hope is that this movement can turn grain chart signals higher without a bearish surprise from USDA this Friday.

* This week’s showlist has about 5,700 fewer cattle on it. However, retail demand is so slow right now as retailers focus on National Pork Month that some packers are expected to take down time for maintenance. That makes it tougher to pull record high carcass weights down, but hopefully will provide some near-term stability to product prices.

* Corn futures have traded as high as $3.985 this morning and are pushing that level now, up 4-1/2 cents on the day. The lead December contract pushed through the triple-top near $3.95 on broader commodity sector buying. Next resistance is at $4.00, followed by $4.06 per bushel.

* November soybeans rallied to $8.955 this morning, but are several cents off of that level as speculative and cash sales increased just below $9 and near trend line resistance off the summer highs on the charts.

* Chicago wheat is 10 cents higher after posting new 8-week highs, while KC is 12 cents higher and MN up 9 cents. Much of the support comes from buying in the major commodity indices amid a weaker dollar, but fundamentally traders are worried about dryness in the U.S. winter wheat belt, Australia, Russia and Ukraine.

* Live cattle futures are the $3 daily limit higher for the lead October contract as the market bounces following recent losses. Product prices are bouncing this morning on good volume, leading the market to try to carve out a bottom. Unfortunately, carcass weights remain quite high.

* Feeder cattle are $2.30 to $3.50 higher on strength in the fats.

* Lean hogs are finding a buy from the outside markets as well, with contracts generally $0.50 to $1.50 higher. The cash market is again steady and product prices modestly higher on routine movement.

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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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY(r) | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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