Closing Comments – Holiday Trade Edition through Dec 31st
This is the holiday trade season where news often slows and volume falls, which can yield sometimes quiet and sometimes erratic trading markets. In the outside markets, US equities found some support after Friday’s weakness, US dollar was lower and crude has put in new lows…again…but is struggling to find fresh sellers at these levels.
Corn had a soft start to the week on pressure from wheat, but closed off from the daily lows. Corn export inspections were the best since September and well above trade expectations at 28.301 mln bushels. Interior cash markets look weaker to steady on holidays and lower ethanol industry profitability. Ethanol margins have now slipped to the negative territory for nearly all plants now. Industry estimate profitability of -15 cents/bu. Sellers from North and South America continue to meet rallies.
Soybeans lower on profit taking following Thursday and Friday’s strength. Soybean inspections came in at 53.756 mln bu, right at the trade expectations. For the year soybean exports are 7 percent behind last year. Consultancy AGR Brasil set its forecast for Brazil crop production at 100.6 mln tonnes and stated the current dry conditions have erased the potential for a “super crop” but that production below 96 mln tonnes would take a climate catastrophe. Key focus for now in the trade will be daily forecasts and actuals for the northern Brazilian producing areas…aka; weather market.
Weekly Wheat export inspections came in near double the trade expectations at 17.467 mln bushels, but couldn’t hold up the market which has been susceptible to lower offers from EU, Black Sea and South American sources. Moisture for the plains has kept domestic production concerns at bay, however the market will be watching the forecast Kansas ice and for any unexpected cold snaps in Europe. Analyst Agritel estimates Ukraine’s wheat crop could be off 1/3rd due to low moisture conditions and lower acreage.
Friday’s friendly Cattle on Feed report coupled with Canada’s announcement they will shortly resume pork and beef trade with the US had cattle and feeder cattle futures limit up on expanded limits shortly after the Monday morning open. The oversold market situation triggered buy stops and short covering on the report news with Feb cattle up 4.50 and and feeders up 6.750 at this printing.
Closing Market Snapshot
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.