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Closing Comments


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Closing Comments

Corn saw short covering strength today off the slightly smaller than estimated Sept 1 stocks. Old crop corn stocks on Sept 1 totaled 1.738 bln bu, up just slightly from 2015 but below the average trade guess. The June-Aug 2016 period indicated disappearance is 2.97 bln bu, compared to 2.72 bln during the same period last year. The weekly Dec chart picked up ¼ and 21 ¼ on the month. Short covering gave good support today, but for better direction Dec still needs to prove it can close through 3.42. Longer term front month resistance is in the 3.57 to 3.72 area.  Today funds were estimated buyers of 16,000 contracts. As of Tuesday Managed Money had sold -15,252 contracts taking them to net short -176,844 contracts.


Soybeans didn’t have much news in the stocks report today which left futures slightly higher on the day and off a penny for the week. Old crop soybeans on Sept 1 totaled 197 mln bu, up 3% from 2015. Stocks on-farm were down 16% from a year ago. June-Aug period shows a disappearance totaling 675 mln bu, up 55% from the same previous year period! One surprise was a revision down of 2015 harvested acres, production in soybeans was dropped 2.82 mln bu. On the charts, November is still stuck between 9.40 and 9.90. The expectation is that the big yields will press price lower, perhaps toward the 9.00 area – but for now strong buying has kept the market supported on breaks. In the CFTC data, as of Tuesday Managed Money had liquidated another -32,781 contracts, leaving them only now net long 57,652 contracts.


Wheat continues to. All wheat on Sept 1 was 2.53 bln bu, up 21% from a year ago. June-Aug period showed 6% higher disappearance than the previous year. Wheat production totaled 2.31 bln bu, up 12% from 2015 but just slightly under trade expectations. Wheat area harvested for grain was down 7% from the previous year. Levels of production from 2015 was winter wheat up 22%, spring wheat down 11% and durum wheat up 24%. The support in spring wheat should continue on the need for quality to blend for milling and harvest issues in Canada. Despite the bearish report for wheat, it showed impressive resilience after early session weakness. The wheat market is deeply oversold and running out of new bearish news to keep pressing it lower – that doesn’t necessarily mean it can mount a sustained rally. For that better headlines need to be found.


Cattle finished the week on a sour note as cash cattle traded limit down and the slower purchases last week brought 30,000 more animals for sale this week. Market concern is October Pork Month will shift focus away from beef at the supermarkets and restaurants.


Hogs pressed into new lows on continued seasonal build of supplies and caution ahead of the Quarterly Hogs and Pigs report. The Quarterly Hogs and Pigs came out after market close showing slightly bigger than expected number with Sept 1 all hogs coming in at 102% of a year ago vs the market expectation of 101%. Hogs over 120 lbs were 104%. Cash prices in IA/MN have slid for 15 straight sessions.


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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