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Closing Comments

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Closing Comments

Corn  has been impressive the last few days with indicators turning bullish, up slightly again + 1 ¼ (Dec).  The USDA progress report estimated corn harvest progress at 97% compared to 93% last week, which is right on par with last year.  Michigan is the state with the most percentage left, as they are 83% harvested vs. 93% last year, while Nebraska has the most total corn volume left to harvest.   As we approach the Thursday holiday, trade will begin to slow down and thin out.  Friday is an abbreviated session with Dec options expiring, and has the potential to show some volatility.  Ethanol and processor bids are steady firm, and CIF corn is also steady firm.  In exports, Malaysia opted for an unspecified amount of Black Sea corn, which was a disappointment for those who believed the U.S. may compete for this contract. 

 

Soybeans continue to find support in export demand, strong Dalian Exchange prices, and fund buying by traders, as the market continues to bullishly surge forward + 9 ¾ (Jan).  Interestingly, the “Turkey trade” statistics have shown a track record since 1975 of soybeans closing higher in 30 of those years and the day after Thanksgiving trading higher in 25.  If you throw the Cubs winning the World Series and Trump winning the election into the mix, we could be in for a volatile holiday trading week.  Gulf bean values are struggling with Nov. barges +22 off 3, Dec. +27 off 3, and Jan. +35 off 2.  China contracted a private purchase of 30K mt of Soyoil, according to the USDA.  In South America, soybean crop planting is pegged at 75% planted in Brazil and 25% planted in Argentina.

 

Wheat has not taken the cue from the soybeans rally, with mixed results: Chicago – 3, KC + 2, and MN + ¼.   The USDA progress report estimated Winter Wheat 97% planted compared to 95% planted last year, and Winter Wheat emerged at 89%, on par with last year.  On the export front, Bangladesh reported they have inked a direct government deal with Russia for 200K mt of Russian origin wheat.  Earlier this year, they announced a plan to import 500K mt for the marketing year ending next June.  The Ukraine Ag Ministry penciled in total wheat exports to this point at 9.535 mln mt, which is 874K mt ahead of last year’s pace.  China’s largest grain company has started exporting wheat flour to Canada (to be used to make dumplings), as China’s government announced it wants to start reducing its reserves.

 

Live Cattle futures moved moderately higher with Dec + .325.  The cash markets are possibly foretelling higher trade is imminent, given the jump in beef prices this week and the overall optimistic mood.  Cattle offered for sale this week were 30K head over last year, with price expectations also higher this week.  Most are awaiting the online auction tomorrow to give a gauge on this week’s market.

 

Hogs futures had a slight pullback after yesterday’s break out of consolidation following yesterday’s action –  .475.  Cash markets were steady today but will likely be lower in the short-term for a couple of reasons: one is near record weekly production and two is a decline in pork export interest.  However, the futures have rallied this week partly because of short covering and optimism surrounding pork demand, going into the 1st quarter of next year.  It is likely that the large supplies are due to hog producers pulling their supplies forward, which is exactly what needs to happen in order to avoid a glut of animals in the first half of next month.  The big question is – what will happen with the cutout after Thanksgiving and into Christmas?  The value of hams will be a key barometer.

 

Other news included a video announcement by Trump of initial steps he will take in his administration which include withdrawing from TPP and eliminating energy regulations.  Time will tell what effect changes will have on export relationships (especially with Mexico and Japan), but hopefully more favorably negotiated trade agreements and a boost to the energy sector will lead to prosperous times ahead.

 

Weather  The 6-10 day forecast is predicting above normal temperatures and above normal precipitation.

 

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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