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Closing Comments

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Closing Comments

Corn was helped by short covering ahead of the USDA Monthly crop report and in part to the energy futures making strong advances in today’s trading session.  Funds still hold a large short position and could try to take a risk off approach with average of analysts expecting more of a yield cut on Wednesday, albeit small.  Anything lower than a 172 yield forecast would be a big surprise and most guesses are between 173-174 national average.     

 

Soybeans continue to see good harvest progress and for the most part strong yield reports.  Improving planting conditions in South America and higher yield expectations have kept the recent bean rally in check.  A yield report of 51.5 bushels or lower would be supportive to a bigger bean rally and some guesses have been as higher as 53 bushel, which would be 5 bushels better than last year’s record of 48.   

 

Wheat also provided a short covering rally, mainly in the Chicago complex after Commitment of Traders showed the fund’s net short position is close to 747 mln bushels and that compares to the 359 mln bushels of soft red winter wheat the U.S. farmer raised last year.  Minneapolis contracts still remain the strongest due to quality concerns, but KC and Chicago have a lot of short positions that could be covered with a strengthening world economy or changes in world weather.

 

Cattle markets may not have scored a bottom yet with today’s move putting a couple of the nearby fat contracts limit down and feeders down close to 3.00 nearby.  Heavier cattle continue to be reported coming to the market and the lone bright spot is that the swap rate is improving.     

 

Hog put in a mixed day as the futures try and figure out if it is time for a bottom to be in place or is there more downside to come.  No news is good news in the form of Hurricane Matthew should not delay Smithfield Foods from reopening the North Carolina plant that was shut down over the weekend.

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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