Closing Comments – Holiday Trade Edition through Dec 31st
Merry Christmas to you this week. Wishing you and your family a joyous holiday.
Light news and low volume today as the market ends the trading week for the Christmas holiday. Lower US dollar, higher crude oil and supportive export sales wasn’t enough to provide support to the grain complex.
Corn had an uneventful but mostly lower day, managing a new low close for the March contract on very light volume. Export sales came in a little better than expected at 31.6 mln bu which is in-line with the needed pace for export projections. Ample domestic inventory, anticipated Argentine export supplies and domestic end-users generally struggling with their own profitability – are keeping buyers in hand-to-mouth mode. .
Soybean exports were reported at 76 mln bu – much better than expectations, the best since September and a record high for December, but it wasn’t enough to overcome the ample supplies, fear of Argentine sales and the expectations for relief rains to come to northern Brazil. The trade is anticipating the rain patterns to shift into the 20 percent of the production area that has been plagued by hot/dry – but the models are still low confidence. Sunday weather models should drive trade behavior Sunday night & Monday after the long weekend.
Wheat export sales came in at 13.6 mln, above the four week average of 11.4 mln bu. The uptick the last three days in open interest suggests that recent activity may be new short positions. Monday the Commitment of Traders report will be released to give an update to the size of the current short fund position as of December 22nd. Current weather being watched is the too wet conditions in the Midwest/southern Midwest putting wheat at risk of frozen, saturated ground while Europe and Russian wheat is not hardy enough yet for a cold blast – but risk of a damaging cold blast remains low. Ample supplies and eager Argentine sales are keeping a lid on price.
Livestock higher nearly across the board today. Wednesday trade saw good demand in the western Corn belt with Nebraska dressed sales $16 higher than the week prior with live sales 8 to 9 higher. CME Group announced they will be raising initial margins for spec traders in feeder cattle by $523 dollars after the first of the year – a reflection of the volatility the market has experienced. Hogs where supported today after yesterday’s Hogs and Pigs report. Pigs per litter looks to be back on track at new record highs following the PEDv disruption. With the reduction in intention to farrow, production should be up only around 1 percent next year vs the 7.6 percent jump to 2015.
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.