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Closing Comments


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Closing Comments

Corn found technical buying and fund short covering ahead of tomorrow’s USDA report. Weekly export inspections were off the previous week, but still a respectable 44.5 mln bu. So far this year we have exported 271.9 mln bushels of corn, 79% more than last year at this time. Trade is expecting tomorrow’s USDA report to trim a bushel off September’s yield estimate and to also work down the global stocks of corn. The last ten years of the Oct report show a 50/50 price movement with an average increase on the day of 4 cents. December corn was able to climb back and close above the 3.45 area again and saw bull spreads leading price action.


Soybeans traded their usual stronger morning, weaker afternoon as the market continues to expect an increase in national yield on tomorrow’s USDA report. Average trade estimate is a 51.5 bpa vs the Sept guess of 50.6. If realized, this would be more than 3 bu above the previous national yield record. Seasonally soybeans tend to bottom the end of Sept, beginning of October. Harvest progress is estimated to be close to 50% which could be moving the trade past the ‘supply pressure’ and move its attention toward demand and South American weather. A break down to support of 9.00-9.20 is plausible with a bearish surprise on yield while rallies to 9.90/10.00 could be seen if yield estimate comes in below expectations.


Wheat saw short covering again today following Friday’s CFTC report showing that Managed Money traders had added another -20k to their already huge net short position. Ukraine estimates stated an expectation of a cut in exports of more than 8% vs last year due to poor weather. In Chicago, closes above 4.10 Dec would put the trade in a defensive position and could be the trigger for a short covering rally toward 4.50.


Cattle extended losses into new lows but were able to close off the daily lows. Boxed beef saw choice trade .22 higher and select drop -1.15, taking the spread to $10.51 – a year ago saw this spread closer to $6. The market will be watching for cash trade signals and for indications of demand developing below $100.


Hog saw some short covering today, gapping higher on the open, but ended up closing close to the middle of today’s trade range as large supplies keep the pressure on the cash and futures markets.

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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