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Closing Comments


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Closing Comments

Corn traded in consistently positive territory today, following through recent action as harvest gets under way. Technical buying continues to fuel the market that till this point would seem to have very few fundamental reasons to be rallying with record large crop size. This give-and-take of fundamentals and pure money flow should continue to make the market choppy with the bull-bear line remaining at 3.44. As harvest picks up, continued strength should mark a lower yield, while a retracement to and through our lows will support a 175+ yield. Linn and Associates released an updated yield of 171.5 bpa, raising the US crop to 14.88 bb, but down from the USDA’s current 15.15 bb forecast.


Soybeans continue to experience the give and take of a well-supplied, yet demand hungry market. Mid-$9 beans continues to host active buying, with another 484k mt sold this morning to China. With export demand under-pinning the market, we should continue to see range bound trade until supply is more known. $9 and $10.50 should be the outside targets of this market moving forward, with violation of either signaling the trend moving forward this fall. Linn and Associates released an updated yield of 49.6 bpa, raising the US crop to 4.17 bb, nearly 100mb over the USDA’s August expectations.


Wheat was positive today, though KC and Minneapolis did not share the strength of the rest of the complex. Stats Canada this morning showed a large decline in stocks from March, though still almost 1 mmt over their expectations at 5.167 mmt of wheat. Egypt made headlines this morning as they rejected a 63k mt shipment of Romanian wheat due to presence of Ergot. Rejections like this one continue to raise domestic grain prices in Egypt, the world’s largest wheat importer. Large losses taken by traders in these situations could shake up the world wheat market and lead to food shortages in Egypt.


Cattle finally stopped the bleeding today, reversing solidly with fats more impressive on the recovery than feeders. Packer’s margins continue to increase with expectations of a larger slaughter number next week to capitalize on producer panic selling. Carcass numbers continue to climb, though at smaller weights than last year, with gains expected from now until the beginning of winter weather. On the chart, fats formed a solid reversal bar that should bleed strength into tomorrow’s session, and with any meaningful follow through should mark a bottom in cattle for now.


Hogs rallied strongly after yesterday’s weakness, continuing the recent pattern of choppy range-bound trade. Cash hog prices remained steady as packers secure in their margins and wholesale demand remained supported at $80.23. Hog numbers should begin to increase seasonally as temps allow for better rate of gain into the fall.

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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