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Closing Comments


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Closing Comments

EIA energy report showed a build in crude oil stocks again, but a surprise drop in gasoline and diesel inventories. Ethanol info was mixed, showing a small draw on stocks despite the near record level of production. Blender demand holding steady at high levels and exports are expected to pick up for Ethanol.

Corn finished higher but continues its consolidating trade ahead of the USDA report Friday. The funds are holding a significant short position, but remain comfortable with the anticipation of growing carry-outs from the planned record US crop. Trade above 3.37 in Dec will likely encourage short covering, but more significant direction will be taken from Friday’s USDA report. Firm support and more significant buying in December’s contract will be just below the market in the 3.20-3.25 area. Longer overhead resistance in the 3.60 and 3.80 levels for the Dec contract.

Soybeans encountered profit taking as the USDA report nears as weather continues to look cooperative in many areas but finished well higher than the session lows off the exceptional demand and the recognition that the US needs to produce at least a 48 bu national yield to quell balance sheet concerns continues to provide price support at these levels. Concerns in Argentina that with the liberalization of corn and wheat export policies, Soybean production will continue to fall. Currently the crushers there are operating at only 80% capacity. Some reports continuing to surface on the development of white mold and SDS in soybeans. Soybean condition ratings remain high, but the tall and vegetative plants will continue to need cooperative weather the next four weeks. On the charts, the MACD on the daily crossed for higher yesterday. Overhead resistance will be seen in the 10.20 to 10.50 area. Direction will now be driven by Friday’s yield estimate and changes in the export expectations by the USDA.

Wheat was higher today on more short covering as the US dollar retreated and the huge fund short situation needs to work itself out. EU wheat futures were higher today as traders continue to assess the impact of the worst French harvest in 30 years.  

Cattle consolidated today as packers have yet to bit on southern Plains cash cattle that are priced at $122. Last week they brought $117 to $120. An estimated 30,000 fewer cattle are for sale than last week which should underpin price as grocers prepare for the Labor Day weekend.

Hogs found some support in their oversold condition. Futures were helped by their discount to the lean hog index. Ample supply and down trending cash prices continue to weigh on the market as Tuesday’s average cash hog price in IA/MN was down 26 cents per cwt. Decreasing hog weights could indicate producers current on marketings and could offer some near-term price support.

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.




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