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Closing Comments

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Closing Comments

Weaker US dollar and stronger energy market couldn’t support the grain and livestock markets to start the last week of the month. Quarterly Stocks and Hog & Pig report will be out Friday.

 

Corn declined on the outlook for better harvest weather the next 10 days. Weekly export inspections saw another impressive week in corn at 52.5 mln bu, the sixth consecutive 50+ mln bu week for corn. US corn is still the cheapest source for corn in the world but Argentine and Black Sea supplies are edging in on deferred business as is wheat for space in the ration. Cheaper soy meal and the Chinese DDGs tariffs added to the weight on corn. Friday is the USDA Quarterly stocks report. Yield reports continue to be good out of central IL and Iowa but disappointments continue in the eastern belt and southern IL. Impacts of disease and environmental factors at grain fill are contributing factors. Technically corn continues to consolidate and will likely will until 35-50% of harvest progress is seen – corn harvest progress is expected to be around 17% in this afternoon’s report. Close above 3.42 in Dec would signal a change of trend in the corn market. For now, the funds look to be defending their short position.

 

Soybeans fell on better harvest weather prospects and continued big yield reports from many areas of the Midwest. Export inspections this week came in well below expectations at only 14.1 mln bu, the lowest since July. That said, the export pace has been blistering and a flash sale of 240k tonnes from ‘unknown’ showed up today. Iowa rains and flooding are expected to cause Mississippi locks to close later this week; #17 and 18 in southern IA and 20 in northern Missouri. November beans held technically at the 9.44 area. Close below there would project price toward 9.00-9.20. Seasonal price pressure continues for the next couple weeks. The market will be watching for a surprise Friday showing smaller than expected soybean stocks.  

 

Wheat was under pressure for most of today’s session despite the best weekly export inspections in three years at 32.2 mln bu. Friday we’ll see the Small Grains summary as well as the quarterly stocks report. Wheat likely has the best opportunity for a bullish surprise on Friday depending on feed usage and exports. Dec Chicago held above the lows from the 16th but have the momentum for lower now after failing last week at the 20 day MA. Support below at the 3.87 Aug low (9 cents below here).

 

Cattle traded lower on technical selling and softer cash sales on Friday. The Cattle on Feed report Friday was viewed as neutral to slightly bearish. Cold storage report showed a bit more frozen beef than analysts expected. Cash cattle last week brought $104-106 vs the $110 the previous week.

 

Hogs were lower, led by Oct and weighed down by the big incoming. Quarterly Hog and Pigs report will be out Friday causing cautious trade this week. Futures discount to the lean index has provided some support to the trade.

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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