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Closing Comments

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Closing Comments

Corn was quiet overnight as the focus was on the Cubs World Series triumph in extra innings!  The exuberance in Chicago was not felt as strongly by the corn market today, as prices continue to soften into end user pricing, up a modest 1 ¾.  Informa released its yield number today, with corn down slightly to 174 bu/acre compared to their October yield at 174.5.  On the other hand, corn exceeded the USDA export estimate, by exporting 1.473 mln mt as compared to the expected 750K-1.0 mln mt.  Continuing this trend, it was reported that Mexico announced a private sale of 432K mt, and the USDA reported a private sale to Korea of optional origin for 136K mt.  The export market along with growing ethanol consumption has helped support the record large crop yields.

 

Soybeans had a slight positive bounce today, up 3.  Informa  announced US soybean yields at 52.4 bu/acre, raising the number from their October yield by almost a bushel.  Conversely, the USDA announced export sales of 2.514 mln mt, blowing expectations of 1.3-1.6 mln mt out of the water.  Additionally, another flash sale of 120K mt of soybeans sold to an unknown destination was noted today.  This week’s sales were the 2nd largest on record, only eclipsed by the 3rd week of the 2013/2014 marketing year.  This strong demand has helped to stabilize our slide from 48 cents lower from last week’s high to yesterday’s low.  Soybean meal exports came in at the top end of expectations, but are still 18% below last year.

 

Wheat found fund selling reemerge today, as fund managers are still liquidating to remove risk from their portfolios, with the impending USDA November crop report and Presidential election, down -5 ¾.  Wheat exports came in at a disappointing 234,900 mt vs. the expected 400K-600K mt.  However, cash grain resources this morning reported that Algeria bought 200,000 mt of Duram Wheat.  Areas giving recent support this week include fresh business, a Dollar that has recently taken a downturn the past few sessions (due to Presidential election tension), and chatter about possible loss of some Australian production.  In news from the Middle East, Egypt’s situation with a move to free floating currency could hamper their ability to buy exported wheat, as they could experience a 50% reduction in buying power due to currency devaluation.  The new focus of discussion is India, whose import demand is increasing and could play an important future role.

 

Live Cattle futures fell today on technical selling after falling below the 10-day Moving Average down -1.30.  The much anticipated online cattle auction did not provide much information on the cash market, with most of the cattle going unsold.  The cattle that did sell brought $104-106, which is higher than last week.  The trading will be deferred to late week with sellers holding firm, asking $108-110.  Carcass weights will be released today, which will be an important barometer to gauge the position of cattle feeders in the feed lots nationally.  Another trend to watch is the increase of heifer placements in the nation’s feedyards, as this is key to evaluating the stages of the cattle cycle.  On the replacement market front, the question everyone is pondering – how many cattle are left in the country to sell between now and year end?

 

Hog futures were down -.825, as cash prices were somewhat steady to 50 cents lower per cwt as bountiful supplies weakened wholesale pork cutout values.  The USDA estimated that packers processed 31,000 more animals this week than last week, and 42,000 more than the same time period last year.  “There are lots of hogs around.  And even when they (packers) lose something on the product side, their margins remain strong,” a Midwest hog dealer 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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