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Closing Comments

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Closing Comments

Corn extended its short covering rally as the trade adjusts prior to Monday’s USDA report. The monthly supply/demand report is anticipated to show the USDA stepping back its estimate to 173.4 bpa from the August guess of 175.1 bpa. A looming doubt about their August estimate is the use of record large ear weight in their calculations. Accelerated maturity and disease pressure in many areas late season have the likelihood of a record heavy ear questionable. Rains have kept harvest from catching its stride, but early reports range from exceptional in Central Illinois to less than expected in the South and East with some downright terrible yields being reported on some irrigated ground in Nebraska. COT showed Managed Money added again to their large short position over the week ending Tuesday – adding -18,390 contracts to take them -180k net short position. Funds were seen as buyers today of some 6,500 contracts as short-covering continues to reduce open interest. The huge short fund position should continue to offer price support as any hints from the USDA of a pair back in yield will have their position under water and end-users stepping up for more coverage.

 

Soybeans worked higher on strong demand for US supplies and the positioning ahead of next Monday’s September USDA report. Today’s weekly export sales showed 1,776,800 tonnes for 16/17 which was above analyst expectations. Polls of trade participants show an anticipation of the USDA lifting their soybean estimate to 49.2 bpa vs their August estimate of 48.9 bpa. Trade will also be watching for changes made to the old crop ending stocks for soybeans considering the strong export pace to finish the marketing year. CFTC data showed that as of Tuesday, Managed Money continues to liquidate ownership length, trimming off -15,947 contracts. November continues to trade either side of the 200 day moving average, waiting for better yield direction to tip the balance.

 

Wheat complex was mixed in anticipation of Mondays supply/demand report. Continued declines in European milling prices add weight to wheat action. USDA export sales came in above trade expectations at 661,000 tonnes.

 

Cattle recovered off short covering and future’s discount to cash prices. Funds are in their second of five days of rolling October positions to December. Cash cattle in the Plains have generally been bringing $105 per cwt, down from $110 to $111 a week ago.

 

Hogs turned lower following the past couple days of market gains as traders sold hogs and bought cattle. Futures discount to the lean index is providing some price support. The USDA export report showed 24,300 tonnes of pork sold to South Korea, up slightly from the previous week.

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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