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Closing Comments

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Closing Comments

US Federal Reserve stated it will hold rates near zero, but signals for a possible hike at its next meeting. Comments stated that the housing sector has improved and fixed business investment and household spending increased at decent rates.

The US dollar is .75 higher at 97.74 on the Fed announcement.

This week’s energy report found less growth in crude stocks than the market anticipated, growing by 3.4 billion barrels, while gasoline stocks shrank for third week in a row and distillates (heating oil) stocks shrank even on flat shipping fuel usage. Ethanol stocks were reported to be lower by 600k barrels while production was off 7,000 barrels per day at 944,000 barrels.
EU sugar beet harvest is progressing, but output is expected to be well below last year on smaller planted area and smaller French production from the hot, dry summer.
Apple reported biggest annual profit in history with net income of $53.4 billion.
Generally light news in grains, which often has meant softer market.

Corn

Corn struggles on demand concerns and the suspension from Chinese buyers of DDGs.

Trade estimates for tomorrow’s corn export sales are for 300-500k tonnes.

Chinese customers have temporarily stopped buying distiller’s dried grains (DDGs) from the United States on concerns that Beijing may launch another anti-dumping probe into imports of the product. DDGs in China are used as substitutes for corn and soymeal in feed milling. The previous investigation was launched in 2010 and subsequently dropped in 2012

Corn is also absorbing the strong showing by Mr. Macri in the Argentine presidential election. A win on November 22 by Macri could bring more corn to the global market. Farmers say Macri’s policies would be a huge incentive for them to switch some soy fields to corn after years of neglecting the crop due to interventionist government policies.

Technically the corn market is continuing its value price commitment to the 3.72 to 3.90 area where buyers and sellers continue to trade. 3.68-3.72 Dec is nearby support. MACD is neutral while Stochs have pointed down on the last two days of weakness.

Soybeans

Soybeans trade lower on cooperative weather outlook in Brazil and weak board crush margins.

Trade estimate for tomorrow’s soybean export sales are 1.6-2.0 million tonnes.

Bids for barges of soybeans were steady to slightly higher, with export demand for soybeans much stronger than demand for corn.

Floor sources suspect fund selling of 8,000 soybean contracts.

Soymeal, while still above the trendline resistance that it broke up and through on October 12th, put in new four month lows for the December contract. Soy oil was the bright spot in the complex, closing higher on global veg oil supply concerns.

Wheat

Wheat recovers early session losses, with December Minneapolis closing slightly higher on the day.

Rumor that Mexico may have purchased French wheat, highlighting the challenge of the exchange rates and low ocean freights in wheat exports. On the positive side, Baltic States seem to be focused on fulfilling current sales commitments rather than making new sales.

After the close, Egypt announced a tender for wheat for Dec shipment.

Export sales for tomorrow are expected at 350-550k tonnes.

Technically the wheat market ran out of sellers within an hour of the opening of the day session – recuperating early session losses and showing a market reluctant to follow through from yesterday’s “shooting star” bearish signal. Chicago wheat is caught above the 50 day moving average and below the 200 day. 5.30 should continue to present resistance to the market, breaking through that area may create additional short covering as many contracts have been added in the sub-5.40 area.

Livestock

Cattle trade limit higher on midweek cash trade and short covering. December Hogs trade either side of unchanged while deferred are lower on supply concerns.

Cattle futures hit their daily limit on support from a government report showing wholesale beef prices climbed from the prior day. Wholesale choice-grade beef prices rose $2.35 per hundred to $220.30, Select advanced 83 cents per hundred to $211.90.

Short covering was in action today after the recent weak futures trade was surprised by midweek trade showing price flat from Friday. This sparked expectations that processors may be willing to pay higher prices later this week.

Lean hog futures have Dec holding up from the cash market as they work towards December convergence while deferred contracts were weak on expectation of ample supplies. Fears of the return of PEDv have not yet developed and producers are taking advantage of inexpensive feed costs to boost herds.

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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