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Closing Comments

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Closing Comments

Corn was basically unchanged on light volume overnight coming into Turnaround Tuesday and had a modest gain, + 1 ½.  Corn harvest is in line with where it should be at 61% complete on Sunday, and the weather forecast does not appear to be of a concern to finishing on schedule. Cash corn is experiencing some appreciation post-harvest in some areas, but likely is tied to a sharp increase in freight costs. It was reported that MFG of South Korea purchased $66K mt of optional origin corn, paying $192.90/mt CIF.  Ethanol is still running hot with record output expected by December.

 

Soybeans overnight markets traded slightly lower and resumed today, down 2.  The USDA reported another flash sale of 516,000 mt to China, continuing the torrid pace. However, there are reports Brazil may be participating in Chinese sales also for Nov-Dec delivery (4 cargoes), which is not typical as their prices this time of year are not in line with the U.S. Apparently, reports are indicating the Brazilian negotiated price is in line and they may be selling an additional 10 cargoes.  This will be worth watching.

 

Wheat, attempting to bounce back from a poor performance yesterday, had a small gain up 1 ½.  The first winter wheat crop condition update pegged the crop at 59% good/excellent vs 47% last year.  This is the 2nd best rating in 7 years, with the crop 79% planted vs 82% average.  Egypt has made several significant buys since it rescinded its zero tolerance policy on September 21st, accepting 11 cargoes from Russia and 2 cargoes from Romania.  The U.S. even made a legitimate offer but the freight is the negating factor, $15 higher than Russia or Romania. But, the world’s largest buyer has lost some of its negotiating power after traders have become wary about doing business following inconsistency and changing government policies.

 

Cattle reacted strong on Monday to the favorable COF report on Friday, but traded slightly lower today.  Carcass weights will be released on Thursday and will be watched closely as an indicator of the position of cattle feeders.  The new online auction attracted 14,000 head last Wednesday and is getting attention as a good barometer for cash prices. In order for it to become a legitimate future marketplace, it will need to see volumes of 10-15,000 head each Mon/Wed/Fri.  It is reported that grocers may be preparing to offer beef in November as on option to ham and turkey over the holidays. However, sky-high packer margins may again prompt feedlots to hold out for higher prices, according to analysts.

 

Hogs found support from Monday’s firm cash and wholesale pork values, and continued in a positive direction, up 1.425.  One trader commented that processors may be expecting a gap in marketings after producers initially rushed animals to packers ahead of schedule as prices were heading downward.  Retailers are finalizing pork purchases as October comes to a close.

 

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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