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Closing Comments

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Closing Comments

Weekly petroleum inventory report showed an 8 million barrel build in crude, but was offset by draw-down in gasoline by 1.5 million and distillates of 2.6 million barrels. Not an uncommon divergence in inventories during refiner seasonal maintenance.

Ethanol numbers were fairly uneventful showing a small up-tick in production of +0.2% over last week and a slight drop in inventory of -0.4% to just over 790 million gallons. Implying an average demand week.

Metals markets are lower and US dollar was higher on continued concern on on-going global economic conditions.

Joe Biden said he won’t run for President.

Corn

Corn follows through on Tuesday’s strength in high volume and bull spreading.

Corn joined along with soybeans and wheat today in the futures market with bull spread at work, December gaining a penny on March. Bringing carry to March down to 9 ½, its narrowest since the beginning of July.

A tale of two crop years continues as farmer selling is especially slow in the east where there is ample storage on the shorter crop, bringing continued strength in the cash market. Western areas with good crop supplies are still dealing with finding a home for extra bushels.

Funds were reported to be buyers of 11,000 contracts of corn.

December stopped at nearby resistance at $3.80. Corn is coming out of its oversold area in the stochastic indicators.

Soybeans

Soybeans find strength from the soy oil market and bull spreads.

Chinese demand continues to support soybean market on improving crush margins by Chinese processors. A private sale of 20,000 MT of soy oil to China and continued concern over impacts on production of Palm Oil due to el Nino support the soy oil market.

Malaysian palm oil futures hit a two-week high after Indonesia cut its output estimate for next year on El Nino dry weather pattern affecting yields from maturing trees.

While crush margins are good, the meal market struggles still in the complex under softer euro meal prices and the expectation of a 15/16 Brazilian soybean crop of a record 100.6 million tonnes.

Technically November was able to hold itself up above $9.00, fitting into the up-trend of higher-highs, higher-lows. However the bears are just above the market remembering the large yields and behind pace of export commitments.

Wheat

Wheat finds support on the possibility for some export competitiveness by the US.

Wheat too seems to have run short on sellers here and abroad as buyers are having to work harder to make purchases. The market is caught between concern over production issues in Ukraine / Australia and the plentiful global supplies / anticipated moisture relief in the US Plains.

While global demand for wheat hasn’t necessarily picked up, the drop in US wheat futures has helped increase the proximity of capturing export business.

Bangladesh has rejected a 20,000 tonne cargo of French wheat after the grain failed the tender specifications of 10% protein. The grain buyer has been previously criticized for rejecting grain various sources for quality reasons.

Wheat, like corn, is coming out of its oversold condition on the daily charts – but will likely be range bound for some time with sellers above the market and reluctance of sellers below these levels.

Livestock

Cattle futures slow their recent assent while hogs trade mixed.

October live cattle are trading -0.375, October feeders -0.575 with deferred months holding onto gains. December hogs are -0.300 at 67.550.

Boxed beef cutout values are higher on Choice and weak on Select on light to moderate demand and light offerings. Choice rib, chuck, round, and loin cuts steady to firm while Select steady to weak. Beef trimmings were weak to lower on moderate demand and moderate to heavy offerings.

USDA-NASS October Cattle on Feed report is due out this Friday with numbers for total steers and heifers marketed and placed during September, and the cattle on feed inventory as of October 1st, for feedlots with a capacity of 1,000 or more cattle.

Average estimates vs a year ago for On-Feed Oct 1 is 101.8, Placed in Sept, is 93.9, Marketed in Sept is 97.7.

The market will be watching the heavy weight (800+ lb) category if it continues the category with placements consistently above a year ago.

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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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