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Closing Comments

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Closing Comments

Rains in Brazil continue to give some relief in the north. It does dry out a bit but rains are expected to come back later into next week. There are still concerns about soybean development being pushed back in Mato Grosso. Intentions of switching some of the unplanted bean acres over to corn are starting to gain some traction down there.
Export sales estimates for tomorrow morning for corn are between 500k-700k mt, soybeans 650-1.0 mln mt, and wheat 200-400k mt.

Corn

Corn recovered into the close to keep short term positive momentum.

Corn held up the strongest today with December contract closing on down a ¼ of cent. The recent momentum in corn can be said to still be intact, and short term indicators are pointing up for at least bounce from this area.
Reuters reported that Monsanto Co executives said Wednesday that they expect corn prices to rise in the year ahead, which will help the company reach its earnings forecast, but the majority of its growth will come from new products and expanding its reach in new markets.
China National Grain & Oils Information Center (CNGOIC) has lowered its estimate for the country’s corn stockpiles to 52 million metric tons compared to September’s estimate of 55 million. The new total is still approximately 1.05 million metric tons higher than last year due to an increase in domestic production and lower demand.

Soybeans

Meal provided most of the movement today in overall complex, crush margins continue their decline

CIF soybeans are weaker again today. Crush margins continue to fade and December meal made a new contract low today, weighing on the overall complex. Meal was trading at its lowest values on the weekly chart since December 2011. Buying opportunity then?
Gulf bids have softened a bit as China has been reasonably quiet the past few days. Board crush margins have weakened to levels closer to last spring with January margin near 76 cents. Strength will need to develop in the meal market and the meal and oil bids for strength in soybean futures to be sustained.
Soybeans were able to close a nickel of their daily lows, keeping some of the recent positive momentum intact. For now, meal seems to be the leader in the complex and the one most worth watching for short term direction.

Wheat

Wheat breaks on overall broad selling in the grain complex and improving weather conditions in dry areas.

Weather and over supply issues keeping coming up to affect wheat prices. Right now overall weather has gotten better in some of the drier areas of the US, and other countries expecting little to no issues to produce above average crops. Wheat is typically a headline market and news in general has been hard to find especially to a more positive direction.
Technically, wheat continues to hold support areas on the charts though some of the deferred contracts have started to slip below in all markets indicating more supply down the road without weather problems.
The Kansas City vs. Chicago spread lost a little ground today after a couple of previous positive closes. The December spread lost a ¼, while March gave back a .01.

Livestock

Livestock higher today on more short covering and short term technical indicators starting to point up.

Volatile livestock markets continued today mainly in cattle. Both fats and feeder markets traded limit up for at least a brief period. Cattle do look like they are trying to forge a bottom on the charts as we start getting closer to winter weather.

AM boxed beef cutout values were mixed, with choice down -36 and select up +64 on 98 total loads. Morning pork cutout values were higher, with carcass up 1.24 to 73.27.

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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