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Closing Comments

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Closing Comments

Corn harvest progress at 46% complete vs. last week 35%. Last year at this point harvest was 54% completed. Corn conditions were rated 74% good to excellent compared to 73% last week. Weekly corn inspections came in a little on the light side with 875,808 metric tons inspected vs. 1.2 mln metric tons that was expected.  Funds bought 32,000 contracts of corn last week but are still seen net short 131,000 contracts. 

 

Soybeans keep the demand focus alive with another huge day of inspections. Weekly inspections seen at 2.508 mln metric tons vs. expected 1.450 mln metric tons. Soybean crush was just slightly over expectations at 129.405 million bu. vs 127.7 million bu. expected.  Soymeal exports were down this month from the previous month by 135,000 tons. That is about a 24% drop month to month. Harvest progress at 62% vs. last week at 44% and last year at 73%.

The Chinese delegation was in the U.S. last week and signed agreements to purchase roughly 5.1 MMT of soybeans on Friday. This total is on top of the 4 MMT that they did a similar signing for back in August. South American plantings have gone smooth so far. Beneficial rains fell across most of Argentina growing regions over the weekend. Brazil also got beneficial rains with only Goias and Minas Gerais in NE Brazil missing rains. Future forecasts at this point for South America look promising.

 

Wheat supported again with short covering. Funds bought 16,000 contracts of wheat last week but are still net short 135,000 contracts. Saudi Arabia ended up buying 610k tonnes of wheat in tender last week. Export inspections today were 450,613 metric tons down from 550,000 that was expected.

 

Cattle live prices last week ranged from $94-99. Dressed prices were mostly $153-155. Carcass weights were up about 5# last week. This is down about #15 from last year but this will be watched closely as we move forward. Peak weights normally occur in October when more cheap grain is accessible. The cutout for the week was modestly higher which indicates that beef demand has remained stable.

 

Hog prices have just completed the biggest spring to summer quarter decline going back to 1980. It was a 12.9% decline. Pork production this summer was 6.1 billion lbs. Up 140 million pounds from the spring quarter. Pork belly inventory this summer has been a big reason for the price decline with a 50% increase this summer in supply from July of 2015.

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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