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Closing Comments

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Closing Comments

Corn short covering rally continued today, extending gains to two week highs. Trade participants are expecting the USDA to lower their US corn yield estimate to 173.4 bpa from their record August estimate of 175.1 bpa on Mondays report. Ethanol futures were higher today on support from the energy market and a down-tick in ethanol stockpiles. Over in Europe, the hot/dry corn production weather continues to chip away at their production – affecting countries including; France, Romania, Bulgaria and Poland. The French crop is expected to be the worst since 2003. Funds were seen as buyers of 8,000 contracts again today.

 

Soybeans mixed trade today and was able to shrug off early losses. Soybeans have gained now for the fifth session, supported by strong Chinese demand – but lack of new sales announcements overnight limited gains. Ahead of next Monday’s USDA report, analysts are expecting an increase to 49.2 bpa from the August estimate of 48.9 bpa.

 

Wheat worked higher on short covering and hope for export demand. European wheat futures have been working lower, but were able to find technical support today.  Algeria’s state grains agency bought close to 400k tonnes of milling wheat that will be sourced from various locations, including the US.

 

Cattle couldn’t extend yesterday’s reversal, pressured by weaker cash trade and wholesale expectations. Early reports for Plains cash trade are showing as much as $5 lower than last week. Packers are simply reluctant to bid up for cattle despite their profitable margins for fear of demand tapering off.  

 

Hogs found support on the futures discount to the lean hog index but soft cash and wholesale prices are limiting strength in futures. Peoria hogs traded steady at $35. Smithfield’s Monmouth IL plant is expected to open back up today following Monday’s fire which shuttered the plant.

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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