Home Market Market Watch Closing Comments

Closing Comments

SHARE

cid:<a href=image009.jpg@01CE6CE4.660D8B30“>

Closing Comments

Corn continued its harvest rally, up 3 ½.  However, export sales were a bit disappointing, as the USDA announced 799,300 mt in new sales compared to the low end expectations of 850,000.  YTD sales are still stellar, with 23.3 mil mt compared to 12.6 mil mt at this time last year.  However, sales are  going to need to maintain a strong average to meet the USDA’s 2.225 billion bushel export projection, as bushels/week must average 32.8 mln through the end of the year.  On a positive note, South Korea purchased 273,000 mt of optional origin corn for Feb/Mar.  Corn futures in both the Euronext Paris and Dalian markets traded positive today.

 

Soybeans, trying to extend their gains into new recovery highs, were up 4 ¼.  The export trend continues as the USDA reported a private sale this morning of 396,000 mt to China, and an additional private sale of 129,000 mt to an “unknown” destination.  As expected, the bean export report was 2.045 mln mt.  Some influencing factors to the strength in soybeans include repeated attempts by the market to break to the downside have been turned back, Argentina is experiencing wet planting conditions, and we are now in a harvest rally which is being bolstered by a changing technical posture.  There is not evidence fundamentally of a bull market developing, unless a South American story begins to emerge.  Cash fundamentals would suggest that the soy rally will likely dissipate, especially if China is front-loading US soybean purchases.

 

Wheat action highlighted Chicago leading the way overnight (both in the market and on the baseball diamond), as the short covering continued into today’s trading, up 3.  A couple of factors not helping the wheat cause include the US Dollar trading at the upper end of its recent range and the IGC upping the global wheat output forecast for next year.  The export report was solid, with net sales showing 646,100 mt vs. expected 400K-600K mt.  The overall pace of sales is right in step with USDA expectations, with 12.3 mln bushels/week average sales needed for the remainder of the year to hit the target.

 

Cattle futures traded higher in anticipation for stronger cash prices tomorrow.  Compared to last week, fed cattle sales are $3-5 higher with most sales between $103-105.  The buzz recently has been about the online auction and the several functions it will serve: setting cash prices for some business to business transactions, providing a transparent flow-through to examining, analyzing and reporting the cash markets, and its role as a prime example of how the web will shape ag markets in the future.  On another note, an emerging trend that has not gotten much attention is the increasing placement % of heifers placed on feed and slaughter each week.  As the % of heifers increases, the beef tonnage numbers come down because of the heifers’ lighter weights.  For the week ended Oct 20, the USDA showed US beef sales at 8,300 tonnes (majority to Mexico), vs. 16,000 tonnes last week.

 

Hogs got back on track extending the gains from earlier in the week, up 1.175.  Both Dec and Feb futures have spiked up due to buy stops and bull spreading trade.  According to anonymous sources, the Dalian is planning to offer hog trading next year for the first time.  This is in response to price swings becoming so large that they hamstring the ability of domestic producers to catch up to demand, even considering the massive herd size of 450 million animals.  China has an insatiable appetite, consuming half of the world’s pork.

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.

cid:image010.jpg@01CE6CE4.660D8B30

cid:image011.jpg@01CE6CE4.660D8B30

cid:image012.png@01CE6CE4.660D8B30

www.waterstreet.org 
or 1-866-249-2528