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Closing Comments

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Closing Comments

Corn extends higher ahead of the three-day weekend on short-covering and end user pricing. The front month contract made it to $3.01 this week, the lowest on the continuous chart since 2009 before reversing to finish the week. Big harvest expectations are expected to cap rallies but more combines will be in the field next week with a growing expectation of a tone of “it’s a good crop…just not quite as good as expected.” Informa released their yield estimate of 174.8. USDA’s September report will be out on the 12th. FranceAgriMer again revised down their condition rating of the French corn crop, now at 60% good/excellent from last week’s 63% rating. Funds were seen as buyers today of 5,500 contracts. CFTC data showed Managed Money returned as sellers as of Tuesday, adding -8,561 contracts taking them to a net short of -162,503. Trade will open Monday evening at 7 pm CT.

 

Soybeans found strength on fund buying and position squaring going into the long holiday weekend. Private estimates for soy yield out this week include the Commodity Weather Group at 50.1 bpa, Informa at 49.5 bpa. The USDA’s August estimate was 48.9 bpa with their September revision due Monday the 12th. Canola and Soybean Oil were higher today following yesterday’s shrink in US soy oil stocks.  CFTC data showed Managed Money unloaded 27,665 of their net long position, leaving them still net long 99,633 contracts. On the charts, support is currently at 9.37 but if weakness returns the next level of support is at 9.20. Good demand continues to underpin the market, but the expectation of big yields continues to add to the seasonal price pressure.

 

Wheat was higher for the second session on short covering following the 10 year lows posted earlier this week. Russian Prime Minister Medvedev said the government has approved a zero wheat export duty for two years which weighed on European futures today. Managed Money were aggressive sellers of wheat as of the end of Tuesday. Currently US HRWW is the most competitive quality milling wheat globally and signs of demand are showing up in India following their poor crop and out of Japan after resolving their halt to buying of US wheat due to GMO contamination.

 

Cattle descended into new lows on persistent red meat supply worries and concern over post-labor day demand. Weaker cash cattle trade this week sent the October live contract to its lowest price since the contract came on the board in 2015. Cash cattle trade this week in the Plains saw $110 to $110 per cwt which is $4 to $5 lower than the previous week off higher slaughter weights.

 

Hogs gave up recent gains on continued supply concerns. Midwest cash hogs traded steady to 50 cents/cwt lower on reduced demand ahead of Labor Day. Most packers will be closed Monday. Rising packer margins have helped with some recent price support, estimated to be nearly $10 better per head than a week ago.

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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