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Closing Comments

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Closing Comments

Corn continued its recent consolidation pattern, down -2 ½.  The USDA weekly inspections penciled corn in at 889,609 mt for the week ending Nov. 3rd, below the 1M mt expected. However, there was a healthy private sale placed this morning for 172,000 mt of corn to “unknown” destination.  Strength in the dollar will be something to watch as to potential negative effects on exports.  The market in general is expecting a small downtick in corn yield estimates from the USDA report this week.  There could also be a component of demand shuffling from movement of corn demand from feed/residual to ethanol, based on recent ethanol upswings.  But, in general there is not a game-changing scenario shaping up.  In South America, Brazilian corn plantings remain ahead of last year/average, while Argentina is well behind last year/average. December continues to hold support above 3.45 for now.

 

Soybeans held overnight strength into the day session, up 7 ¾ in Jan.  Inspections were slightly below expectations as the USDA announced 2.623 mln mt vs. 2.65 mln mt expected, although it is hard to consider that a disappointing number (even Tiger shoots over par occasionally).  Soybeans exports got on track again early this week with two private sales, one to the Philippines for 135,000 mt and another to China for 132,000 mt.  It almost seems impossible at times to outgrow China’s appetite – commercial traders are expecting a continue drop in demand in the coming weeks, if doesn’t drop; watch out above.  In South America, Brazilian soybean plantings are ahead of schedule compared to last year/average, while it is still too early to get a pulse on Argentina due to the lack of updates to this point. Jan soybeans are holding support for now and will need to keep closes above Friday’s low.

 

Wheat was soft with Chicago leading the complex at -4 ¼ in Dec with the higher US dollar not helping the trade.  Wheat was the only grain above inspection expectations as the USDA announced 494,154 mt for week of Nov. 3rd, compared to 400K anticipated.  In weather the past three days, the rains bypassed the driest western 1/3 of the Plains hard red wheat belt, continuing ongoing concerns re: stress hampering crop establishment, making it more susceptible to winterkill.  In other parts of the globe, Russia is coming off a record wheat harvest and is off to an even better start this year, while France’s farm ministry raised its estimate of this year’s harvest by 100 TMT. Technically wheat continues its consolidation in the winter wheat charts.

 

Live Cattle future losses spilled over into today from last week on technical selling and hesitancy ahead of cash prices later in the week, finishing -1.075 in Dec.   The gap on the daily chart filled on Friday, and finished well below the previous low today, setting up a potential break to lower prices.  Last week cash cattle brought only $102-105, after seeing $104-105 the previous week.  Packers processed 7.4% more cattle than the same week last year, according to the USDA. December tested the top of the trendline it broke through last week – any strength that can develop tomorrow would have the bears nervous.

 

In Hogs today, futures traded up .95 while cash prices were seen across the Midwest as steady to $1 per cwt lower, weakened by weighty supplies that are reinforcing packer inventories. Last week, packers processed a record 2.532 million hogs, which beat the previous record of 2.524 million heads. 

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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