Home Market Market Watch Closing Comments

Closing Comments

SHARE






[cid:image003.png@01D10A82.5645B450]

Closing Comments

“Sell” was the default setting for most all commodities to start the month of November as global economic and demand concerns move money to a “risk off” approach. The only commodity markets with strength to note today include; Sugar, Cocoa and Rice while cattle were able to recuperate early session losses.
Internal OPEC squabbles are on the rise as members argue about the need to support a fair oil price and boost revenues just as they feel more pain from low prices. WTI crude oil now starts its fourth month trading in its $40-$50 range.
Gold hit a four week low as technical signals deteriorated and investors feared the Fed would raise US interest rates this year.
Reports from workers at the CBOT at midday of groups protesting the Illinois state budget cuts have surrounded entrances, requiring police removal of the protestors.

Corn

Corn loses ground in commodity selloff on fears of an increase in next week’s USDA yield estimate and tepid global demand.

USDA harvest progress as of Nov 1 was reported as 85% vs the previous week 75% and the five year average of 79%.
Dry mill co-product production of distillers dried grains was 1.91 million tons during September, down 3 percent from August.
Russia is expected to harvest 102 million tonnes of grain in 2015, down 3 million tonnes from a year ago. Their agricultural ministry had previously expected the crop at 100 million tonnes.
Nearby support for corn is today’s low in Dec at 3.76 with 3.72 support below. Bull spreads gained another ½ to have the strongest Dec/March spread close since February.

Soybeans

Strong exports couldn’t overcome favorable weather in South America and upcoming USDA report.

China continues its record buying pace with inspections coming in today at over 94 million bushels of soybeans, 4% off from last week but 9% ahead of last year’s pace.

Harvest progress for soybeans was reported at 92% vs the previous week at 87% and the five year average of 88%.

USDA soybean crush for September was 4.04 million tons, off from the August crush of 4.38 million tons. Soymeal stocks for September were 240,755 tons, down from the August 305,920 tons.

Spot basis for US soymeal was steady to weak at the truck market today. Rail market offers hold steady, underpinned by relatively tight stocks of soymeal available for filling trains.

European vegetable oil prices were lower Monday on concerns over slowing demand and rising stocks.

Technically meal struggled to follow through on last Thursday/Friday’s spring action to come out of its oversold condition, Dec meal is still set for a possible $15-$20 rally if it can garner strength this week but needs to prove it can hold the $300 support area. Soy oil traded to the other side of its tight trading range, risking a bear flag setup.

Wheat

Wheat suffers under anticipation of rainfall in Eastern Europe and the Black Sea region.

Export inspections came in at a disappointing 6.2 million bushels, off -46% from last week and tracking the pace at -17% behind last year.

European wheat prices fell as the euro gained strength and pressure to compete for export business against Black Sea sources.

Crop condition ratings for winter wheat for Nov 1 showed 49% good to excellent over the previous week’s rating of 47% and previous year rating of 59%. Planting progress showed 88% planted vs the 90% for the five year average.

Livestock

Cattle find midday strength while hogs make a recovery off their new contract lows, especially in deferred contracts.

Cattle traded lower early, but found strength in the afternoon session – continuing the recent consolidation (indecision) in the futures market. Keep in mind beef in cold storage is at a record high and for the first time in two decades, fourth quarter production is expected to exceed third quarter production. The recent cattle-on-feed report showed supply up 2.3% from last year.

The WHO back peddled a bit regarding its report linking the consumption of processed meat to cancer stating that its review “does not ask people to stop eating processed meats” but clarified that the reduction in consumption of these products can reduce the risk of colorectal cancer.

Hog futures are extending their recent slide on technical selling and continued liquidation of the long fund positions, dropping the market to its lowest level in months.

Cash hog prices in the Midwest were $1 to $4 per cwt lower as processors started the week with an abundant supply due to seasonal increase. The hog weight gains in the moderate temperatures and affordable feed has helped the packers to fill their inventories more easily.

Closing Market Snapshot

[cid:image001.png@01D1157E.B16146E0]

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.

[cid:image007.png@01D10A82.5645B450] [cid:image009.png@01D10A82.5645B450] [cid:image013.png@01D10A82.5645B450]

Questions or comments? Contact us at 1-866-249-2528 or waterstreet@waterstreet.orgwaterstreet@waterstreet.org>