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Closing Comments


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Closing Comments

Corn started lower but strengthened throughout the day on fund short covering. Weekly inspections were another impressive week, posting 57.880 mln bu, up more than 8% from last week. The funds have been committed to their large short position in corn as evidenced by Friday’s COT report – but much of their position is underwater above 3.45. Today’s close at 3.46 not only puts the funds in the red but has given the Dec chart its first closed above the critical 3.42-3.45 zone. This action confirms the 8/31 bottom on the chart and if follow through buying can be found should encounter resistance above the market in the 3.60 to 3.75 zone.


Soybeans found fervent buying to start the quarter on stronger meal prices and fund buying. Soy inspections jumped this week by more than 180% on the week to over 40 mln bu. China is on holiday but the market continues to look for purchase support as we move into the heaviest pace of shipments to China. In the November contract, resistance tomorrow will be seen above the market at 9.80-9.82. Board crush margin is trying to bottom but the strength of soybeans today kept the board crush margin inching lower as soy oil moved lower. .


Wheat was the weakest of the grains in price action today but was able to recover off the lows before the close. The market was reminded of the large supplies last Friday and confirmed less feeding has switched to wheat from corn, yielding traders to buy corn and sell wheat to start the week. Export inspections were off last week by 27% to 23.586 mln bu. Minneapolis continues to be the strongest of the classes and was able to recover early losses to close positive thanks to the world’s ongoing desire for high quality wheat for milling.


Cattle started lower but were able to recover to post a “doji day” on the chart; indicating indecision by the trade on today’s expanded limit trade. Lackluster wholesale beef demand continues to weigh on price. Fear is that beef demand will be muted during October National Pork Month. Last week cash cattle in the US Plains traded at $103 to $104 per cwt, down from $105 to $107 the previous week.


Hogs were able to stabilize following the recent price descent. Interesting to note that deferred months traded the strongest with May 17 trading up $3.50 while December was only able to muster $.20. Cash hogs traded 50 cents lower on the abundant supplies while wholesale prices were able to jump 80 cents on higher prices for shoulder cuts. Packer margins are estimated at $46.30 per head.


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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