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Closing Comments

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Closing Comments

Corn managed to tack on 5 ¼ cents this week after running out of willing sellers following the bearish USDA report. Managed money is hovering at 40,000 short on futures and options.  Yesterday, Informa decreased their 2017 U.S. Corn Acreage outlook to 90.84 mln acres from 90.97 mln acres, which confirms some of the chatter re: a shift to soybean acres in the near term.  Ukraine’s Ag Ministry announced a record 2016 production, with the total harvest exceeding expectations.  In South America, weather is positive for their planting with a good outlook for both Argentina and Brazil with a nice mix of rain and shine over the next several days. As of Tuesday, Managed Money were big sellers again, adding -57k to their net short in corn. Option expiration next Friday and setting of basis contracts may see the 3.50 area as a magnet in the near term. Longer term look for winter trade between 3.35 and 3.70.

 

Soybeans, has been congested this week but up today, +4 ¼.  China continues consuming at a record level, with another private sale announced by the USDA of 165K mt for 16/17.  Informa released their 2017 U.S. Bean Acreage outlook, showing an increase in acreage to 88.61 mln from 88.49 mln acres previously.   Soybean basis is steady to firmer with the Gulf -3, Sioux City IA, Decatur IL and Claypool IN, all steady.  Funds have finally started to shed some longs, reducing by -26k over the previous week.  For now, January is having a hard time finding willing sellers below 9.80

 

Wheat was up across the complex today after a rather blah week, with Chicago leading the way, + 5.   Informa came out with their acreage estimate, lowering 2017 U.S. Winter Wheat outlook to 33.76 mln acres from 35.42 mln acres last month and 36.1 last year.  This week Japan purchased 136,726 mt of wheat, of which 35 TMT was from Canada and the balance from the U.S.  In France, the soft wheat crop is in very good shape, rated 95% good/excellent, with planting 95% complete.  Russian data reveals that as of Nov. 17th, 122.3 mln mt has been harvested compared to 107.8 mln mt at same time last year.  Yields are also running above expectations at 2.70 mt/ha versus 2.46 mt/ha last year.

 

In Live Cattle, this week’s gain above the initial Nov. 2nd counter trend, could be a precursor to significant and sustained gains in the days and weeks ahead, as live cattle stayed steady, +.150 and feeders were slightly lower.   Cattle on Feed came in at 105% marketings, 95% placements (vs expectations of 96%) and On Feed of 99%. 

 

Hogs have had trouble generating much momentum, but were up once again today, +.425.  Cash prices have been pushed lower, due in part to plentiful supplies and packers giving employees time off for the holiday.  Additionally, retailers have scaled back as they have already completed purchases for Thanksgiving.

 

In Other Markets, the Dollar has been on a tear of late, to put it mildly.  We have cleared the highs from the past couple of years, and focus will be on a resistance level next week of 102.20.

 

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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