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Closing Comments

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Closing Comments

Corn had a small range day of two-sided trade before closing slightly lower on the day, pressured by a lower soybean close. Informa updated their crop estimate today to within one-tenth of a bushel from the USDA at a 174.5 bu / acre yield for the 2016 crop. Both ethanol production and stocks were down on the week to 980k bbls per day and 20.2 mbbls respectively.  Encouragingly, corn finally broke critical resistance of 3.44 Dec last week, and now appears to be consolidating for the next leg higher. Only negative bean action and a lack of follow through buying for wheat can stand in the way of corn’s upward momentum.

 

Soybeans continue to give up Friday’s positive gains, retesting Friday’s open at 9.53 before closing off their lows down nearly 7 cents on the day. Informa raised their yield to 51.6, 1 bushel over the USDA number. A better 6-10 day forecast in the US for harvest to progress, and 5% of soybeans planted in Brazil were also negative to today’s market action. A tight wedge continues to form on the bean chart, with action over 9.79 or under 9.49 forecasting the next large scale move in the bean market.

 

Wheat snapped back from recent lows to drive decisively higher today in KC and Chicago, with Minneapolis looking very overdone and weak in comparison. The big news was a large tender of US wheat to Morocco of 260k mt this morning. As long as funds remain near record short, headlines can produce chop, but there is still little fundamentally to scare speculators away from a market that has handsomely rewarded anyone short over the past 4 years.

 

Cattle shook off an early session set back to follow through yesterday’s action and close on a higher note. Feeders were weaker, while fats turned for higher, and the charts continue to show fats as the stronger of the two. Look for further direction with tomorrow’s release of carcass weights, as they should be even larger than September’s 905 lbs. If we do see follow through for higher, look for 103.60 and 105.50 – 106.25 as potential areas of resistance.

 

Hogs continued their brutal slide today into fresh 15 year lows, with little signs of stopping momentum to the downside. Slaughter is maxed and fear has taken over. This market gives all signs of wanting to test the all-time low in hogs of $28 set in 1998, though we are reaching the marks where speculative buying could begin. Spreads will be important as there is nearly a $7 inversion between October and December.

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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