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Closing Comments

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Closing Comments

Corn gave up early gains going into the weekend on lower energy markets and an outlook for an open weather window for harvest. Generally quiet trade as time ticks off until the Wednesday crop report where the market is expecting yield to drop a bushel on corn. US continues to battle for low cost position with Ukrainian sources. The December weekly chart was able to put in a new high, but not on a closing basis after gaining 3 cents this week. December couldn’t hold onto early strength but was able to hold above yesterday’s low and right on technical support. CFTC data showed Managed Money covered just over 6,000 of their large short position for the week ending Tuesday.

 

Soybeans couldn’t sustain early strength as the prospects of big supply coming to the market continues to cap rallies. The ship lineup continues to build in the Gulf, government will be shut Monday for Columbus Day so export inspections (expected to be big) will come Tuesday. China will be back next week from their holiday week. Interesting to note that there was a flash sale to ‘unknown’ today for 195,000 mt of soybeans. Forecast showing good harvest weather the next few weeks to help progress. Trade expecting US soy yields to jump a bushel on Wednesday’s report. Northern Brazil is called to dry out, but not a cause for concern yet following recent rains. November soybeans continue to trade in the narrowing wedge – early strength resisted at the 200 day moving average today. Meal is trying to bottom, but is struggling to break through upside resistance. Managed Money added just over 7,000 to their net long position for the week ending Tuesday.

 

Wheat was lower to finish the week. French milling wheat closed lower while Black Sea supplies traded a bit higher. Minneapolis’ early strength flipped to weakness to finish the day – but still managed a 6 cent gain on the week as the globe has been adding premium to milling quality wheat. Winter wheats continue their sideways consolidation phase. Concerning on the Minneapolis chart today is a set-up of a “three day fade sell” which would signal a sell if the market trade’s below today’s low next week. For the week prior to Tuesday, funds were big sellers of wheat, adding -20,000 to their already large net short position.

 

Cash Cattle traded mostly at $102 this week, off $2 to $3 from last week. Compared to last week, feeder steers in Kansas traded $3-$5 lower – slow, light demand. Futures had a seemingly rare, uneventful day of trade. Weekly beef production year-to-date is running 4.8% above last year.

 

Hog futures saw Oct higher and Dec lower but a generally uneventful trade today as the market recuperates following the recent steep break. Pork production is currently running 0.5% above a year ago. Hurricane Matthew has prompted Smithfield Foods to temporarily close its Tar Heel, NC packing plant for Saturday’s production.

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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