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Closing Comments

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Closing Comments

Corn supply not the only concern now.  Chatter about the beginning of a Trade war with China continues after the WTO files an enforcement complaint against China.  Will they cut back on imports of corn?  Reserve grain in China was put up for sale and 79% of it was sold which will cause some concern for exports moving forward.  However grain from 2011 and 2013 was also put up for sale and not sold which still suggests that a good majority of their reserve corn may not be good enough quality.  The size of this year’s crop has not been a huge question over the last month but price has been held up because of demand which will need to continue through harvest to not see new lows.

 

Soybeans received some fresh bearish news today with CONAB raising their estimate of the Brazilian 2016-17 expected planted acres.  That news though was balanced with a reduction in the ending stocks of last year’s crop. Early yields out of Missouri seem to be in line with expectations for a large crop thus far even though harvest is in the very early stages.  Some concern developing on the filing against China by the US WTO, on illegal subsidies for corn, wheat, and rice producers and if that could have a ripple affect with beans.  China is obviously our most important soybean importer.  Will or can they take their business elsewhere if things get to ugly?

 

Wheat was sold to India by Ukraine which is the first instance of this in a decade.  India typically buys from France.  Another indication of how worldwide the wheat market has become.  Australia’s crop was pegged at 28.1 million tonnes, their second largest crop on record.  Last year’s total was 24.2 million tonnes.  Wheat continues to struggle when the other commodity markets are down.  No concern from the funds that are short this market until other commodities show they may have bottomed out.

 

Cattle trade up 2 dollars from last week with some selling in TX at 108.  Good close today after coming down and filling the gap on the October chart yesterday.  They could be struggling with some of the Micro economic news as traders try to assess the implications of higher interest rates.  Carcass weights are released each Thursday and will be closely watched tomorrow.  Last week steer weights were up 3# from the previous week but down 10# from last year.

 

Hogs still reeling from the sharp decline in cutout on Monday.  Also some concern for renewed competition from beef as those retail prices are now at the lowest level in 3 years.  USDA expects European Union pork production to stay at record levels during 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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