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Midday Update

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Midday Update

·         The broader sell-off of the commodity markets continues following a downgrade of the global economic outlook by the World Bank.

·         USDA’s daily export reporting system today confirmed the sale of 3.8 million old-crop and 3.7 million new-crop bushels of soybeans to “unknown destinations, as well as 4.9 million bushels of old-crop corn to Taiwan.

·         The Department of Energy reports that ethanol stocks rose to 20.2 million barrels in the week ending January 9, up from 18.8 million the previous week, up from 16.1 million the previous year and the largest one-week jump on record.

·         Ethanol production rose to 978K barrels per day during the week, versus 949K the previous week and 868K barrels per day in the same week last year.

·         Today is the last day scheduled for index fund portfolio rebalancing. That’s primarily a factor influencing beef trade. Rebalancing could be extended if we lock the daily limit again today near the close, preventing the index funds from completing their work.

·         Selling in corn accelerated when the ethanol data was released, but it is now coming off its lows on end user buying, down 5 cents on the day.

·         Soymeal is $1 higher and soybeans are 2 cents higher on bargain-hunter buying following recent big losses. Upfront demand is still strong. Yet, gains limited by big South American crop.

·         Wheat is down 9 in Chicago, down 7 in KC and down 6 in Minneapolis as traders try to find a price that will move U.S. wheat on the global market. Prices are off their lows though as the dollar pulls back from its highs.

·         Live cattle futures are $1 higher on a technical bounce, but traders are being cautious ahead of index fund rebalancing later in the session. Boxed beef movement is good. Choice cuts would set a record high close if they hold current levels, up $2.20 per cwt on the day.

·         Feeder cattle are $1.40 to $1.60 higher on a technical bounce as well.

·         Lean hog futures are bouncing following recent losses, although the cash market is once again steady to 50 cents weaker. Product prices are very modestly firmer this morning.

 

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® | 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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