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Closing Comments

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Closing Comments

Corn was mixed, closing Dec down -1 ½. According to the USDA, corn production is forecast at 15.1 bln bu, up 11 percent from last year but down one percent from August. Based on conditions on Sept 1, yields are expected to average a record 174.4. Down 0.7 from August but up 6 bu from 2015. Of 32 main corn producing states, 17 saw yield estimate reductions while Wisconsin, Virginia, North Carolina, Michigan and Kansas saw yield increases. Notable was an increase of MI of 5 bu and KS of 6 bu. In USDA’s calculations, they lowered their record heavy ear weight since the August guess but increased their number of ears per acre (miracle of modern hybrids?). On the global front, coarse grains saw a slight reduction in global projected carry-out. On the charts, December is running into technical resistance in the 3.42-3.45 area. Large short fund position and reluctant farmer selling is providing support while the trade looks now toward more yield reports as corn harvest gets underway over the next 10 days in much of the corn-belt.

 

Soybeans traded lower off bearish USDA production estimates with November closing -16 cents, up off its daily lows but losing ground again to the January contract. Soybean production is forecast at a record 4.2 bln bu, up 3 percent from August and up 7 percent from last year. Based on Sept 1 conditions, yields are expected to average a record 50.6 bpa, up 1.7 bu from last month and up 2.6 bu from last year. Yields were increased in 13 states, with Illinois increased by 4 bushel to a record 61 bpa expectation. Globally, oilseeds saw a slight uptick in anticipated ending stocks from the August report – primarily of increases in Canadian rapeseed stocks and larger US soybean stocks. This is still a market that is supported by impressive demand, but big supply still has the attention of the market as harvest nears and yield hopes remain high.

 

Wheat extended recent gains on what looks to be a pick-up in global demand and growing concerns for the start to the 16/17 Ukrainian wheat season due to dry weather. US 16/17 wheat S/D estimates were unchanged from last month according to the USDA. Global wheat supplies for 16/17 were raised 0.4 mln tons but use is seen rising faster than supplies, yielding world ending stocks to be lowered 3.8 mln tons (but still a record large quantity.) European wheat futures continued their 5 week descent as Russian offers continue to weigh on export wheat prices.

 

Cattle extended Friday’s gains on technical buying despite last week’s weak cash trade.  Forecast for total red meat and poultry production for 2016 is reduced from last month as beef, pork and broiler production forecasts are lowered by the USDA. Beef exports for 2016 are raised on improving trade prospects, but the outlook remains unchanged for 2017.

 

Hogs gave up early gains on continued supply concerns with December trading into new contract lows. Pork production for 2016 is lowered by the USDA on expectations of slightly lower carcass weights for the third quarter. USDA will release the Quarterly Hogs and Pigs report on Sept 30 which will highlight producer farrowing intentions info 2017.

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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