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Closing Comments

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Closing Comments

Corn was relatively quiet overnight after yesterday’s bearish action.  However, corn slipped lower again today, extending into the 3.45-3.48 support area, down 2 ¾. The early chatter has been focusing on harvest, recent export trade, Nov.8th Presidential election, and of course the USDA’s report next week.  FC Stone is still predicting a large yield of 175.3, and Informa will be out with their number this week also.  The EIA Ethanol report today showed production is up from 991K to 1.022 mln bpd, the highest production in nine weeks.  Ethanol stocks were down from 837 mln gal to 829 (but still at a record high).  Another positive factor is the ethanol gal/corn bushel ratio is down, requiring more crop for the same output.  Overall, coupled with expected reduction in sorghum usage for ethanol, the outlook for corn is positive in the ethanol sector.

 

Soybeans have dipped to their lowest level in more than a week, down 7 ½, in anticipation of the USDA supply and demand report next week (which is expected to increase the production estimate).  China is back in the action with the USDA reporting another private sale of 132,000mt. Trade has been increasingly apprehensive about the prospect of a lull in Chinese buying with the record October tonnage and predicted November cargoes.  Another factor to keep an eye on is the falling internal Chinese corn prices which raises the potential of corn displacing meal in feed rations.  The Brazil Trade Ministry announced that exports are down across the board in the soybean complex compared to figures from a year ago.

 

Wheat was up in Chicago (3 ½) and KC (1 ¾), but MN slid back -2.  It was reported on Wednesday by traders that S. Korea bought a total of 53,350 mt of U.S. mill grade wheat.  As Trump’s poll numbers improve, the dollar is showing weakness, which is a positive silver lining to U.S. exporters.  This will undoubtedly give the market some underlying support regardless as to what else may happen across the grain complex.

 

Cattle was mixed today with feeders showing a positive gain and live cattle futures tallying up a small loss, at -.150.  Feeders continued to provide some support from a near limit up futures market yesterday.  The big event of the day is the online fed cattle auction, that will feature 12,000 to be sold, mostly in NE.  The midweek market has changed the dynamic of weekly trading.  Now, bids early in the week (especially if they are lower than the previous week) are refused, pending information from the Wednesday auction.  Also, keep an eye out for carcass weights to be released tomorrow, as this will be an influential barometer that will indicate the position of cattle feeders in the feedlots nationwide.  The question that begs for an answer – how many head of cattle remain in the country to sell between now and the end of the year?

 

Hogs continued to progress today in Midwest cash markets and hog futures were up 1.375, as good packer demand was met with adequate offerings from hog producers, according to dealers.  Influencing the packer demand and preparation for increased slaughter rates, is retailer buying in anticipation of the upcoming holiday season.  Iowa and Minnesota average hog weights have declined almost two lbs compared to last year, indicating producers may be bringing animals sooner to market and not keeping them on farm for longer fattening.

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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