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Closing Comments


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Closing Comments

Corn started the new month down 5 ¾, stemming the momentum from recent gains.  One bright spot was Mexico, stepping up to the plate today and leading off the 1st with a private sale of 212,344 mt. Some would speculate this could be tied to concerns about what may happen to NAFTA under a new presidential administration.  U.S. harvest has been reported to be 75% complete vs. 77% expected, with IL and IA both at 89%.  In other news south of the border, weather continues to be favorable to planting and early development, as both Brazil and Argentina experienced modest rains over the majority of their growing areas yesterday. The December contract has traded back to the bottom of the recent trading range, finding support in the 3.45-3.48 area. Ideally this area holds this week. Upside resistance is still at 3.58-3.60.


Soybeans led the grains lower, losing 18 off the November contract and closing near session lows.  The tug-of-war continues as the bean market has been supported by demand and fund buying while the upside has been limited by hedging.  There were no announcements again today of any November deliveries.  Basis should be trending more positively for producers now that harvest is wrapping up (for example Decatur, IL, raised their basis by a dime to -10).  On the soy crush front, NOPA has September soyoil stocks down to 1.376 billion lbs from 1.620 mln bushels in August, but still above last year.  The USDA will annouce their Oilseeds Crushing report this afternoon.  In South America, Brazil reported estimated soybean planting at 72% complete compared to 60% last week. The November soybean contract fell today to test the 200 day moving average. The 9.78-9.82 area will need to hold support with price direction mostly led by how soy meal holds up this week.


Wheat followed corn’s weakness with Chicago finishing down 2 cents.  Deteriorating crop conditions for HRW are developing, while the SRW states were seen as improving.  The positive export situation should help the U.S. oversupply, with commitments from African nations leading the way, noticeably higher than last year.  In western Australia, there is concern that there may be up to a 15% reduction in crop production, due to frost.  Wheat makes up 60% of the crop in this region.  However, the east is running ahead of expectations as yields are high, but quality may suffer due to wet conditions. The winter wheat contracts continue their consolidation mode while for the first time in a long time Minneapolis was the weakest performer.


Cattle made a strong showing today, getting back on track with a nice gain in feeder and live cattle futures.  Last week’s cash cattle volumes were some of the largest of the year, mostly at $105.  What were the positive reasons? There were several including large slaughter volumes for the current capacity and inventories needing replenishing, strong box prices, packers needing inventory for leverage over cattle owners offering fed cattle for sale, and lastly the fact that packers would not be buying large volumes of cattle if they thought the market was going to implode.  Keep an eye out for carcass weights to be reported on Thursday as a key barometer to this dynamic market, as cattle weights have consistently stayed below levels of one year ago. November feeders traded to their highest level since September 28th.


Hog futures found technical selling at resistance today. December futures will need to prove support below at the $44-45 area. Cash hog prices held steady in the Midwest supported by decent wholesale demand and continued packer profitability, according to dealers.  “Packers may be satisfied enough with product sales and their current margins to not cut cash bids, even though there are plenty of hogs available and October Pork Month has ended,” an Iowa hog merchant said.

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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