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Closing Comments


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Closing Comments

Corn couldn’t extend its recent winning streak, finishing -5 ½ (Mar). Export sales came in well above expectations at 1.516 mln mt. December corn went of the board yesterday at a 10 cent discount to March. While the US dollar continues its tear, US corn continues to hold the most competitive export spot with Argentina vying for position past March. Ethanol profitability is helping cash bids in many places, however the grind pace looks to be adding to the ethanol inventory build. US poultry is looking to continue to expand which adds to the corn demand as they eye potential Asian demand due to bird flu.


Soybeans continue to hold strength despite fundamentalists calls for these pricing being too high. A heavily sold US farmer in the old crop has lightened selling pressure on breaks and the South American farmer is reluctant to let go of hard assets on currency fears. Today’s export sales report for soybeans were exceptional at 2.008 mln mt – well above the trade expectations and was bolstered by a flash sale of 132,000 mt of soybeans to China. The NOPA crush report for November saw their member’s crush 160.75 mln bu, a couple mln fewer than the market anticipated. Soy oil stockpiles came in just below expectations. Rains are still on deck for the driest parts of Argentina. Technically Jan is continuing to hold above the 10.20 support and is tightening its trading range. Close below 10.18 would signal a potential end to the bull-run while a close above 10.40 would indicate a potential break out of the bull flag.   


Wheat seems to have been most susceptible to the surging US dollar with Chicago -8 ¾, Kanas City -7 ½ and Minneapolis closed -2 ¾. Export sales came in just above expectations at 531k mt. Recent demand is helping the market from falling apart amid the rising US dollar. UK farm ministry expects their 2016 wheat crop to be off 12% from last year. Russia’s ag minister says the country will be the world’s top wheat exporter this season as it has expanded its port capacity and infrastructure in remote areas.


Live Cattle have been running into technical resistance but have not found coordinated selling on breaks. Feb futures finished -0.425. From a technical standpoint they seem to be trying to muster another stab higher, despite the typical unfriendliness of December price trends. Today’s low needs to hold. Fed Cattle Exchange sales have ranged from $108-111 – just over $1 higher than last week. General packer demand has been light.


Hog prices in the Midwest were steady as packers prepare for a large Saturday slaughter. Futures saw a wide trade range today, poking up through resistance at 62.425 and finishing +0.625 in Feb. Cold weather and wintery conditions are making it more challenging to the pigs to plant but dealers are expecting a softening of bids as plants slow down for Christmas and New Year’s holidays.


Outside markets continue to see the US dollar surging on stronger economic prospects and the anticipation of further interest rate hikes in 2017 and 2018.


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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