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Closing Comments


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Closing Comments


Corn continued its March toward a bottom, -2 ¾ at 3.36 (Sept) and –2 ½ at 3.51 (Dec). The weekly USDA report on crop conditions will be out this afternoon, and crop progress is starting to take center stage now over crop conditions. The Pro Farmer Tour last week did not provide a bullish scenario, but it did leave plenty of room for variability. Meanwhile, corn has continued to sink closer to a harvest low. The large spec traders have been busy adding to their shorts, according to the Commitment of Traders report on Friday. They are likely entering this week short over 100K contracts. Will they continue to pile on this position? USDA weekly corn inspections were solid at 805,756 MT vs. estimates of 750K MT. The USDA reported a private sale of 160,020 MT of corn to Mexico for 2017/18.


Soybeans were up overnight but could not muster much energy to counter the other grains, -3 ¾ at 9.35 ¼ (Sept) and -3 ¼ at 9.41 ¼ (Nov). Demand is solid under the market and domestic crush margins have improved. Beans need some heat and rain for a successful finish, but cool weather is dominating the forecasts which will make it more difficult. The Pro Farmer results pegged beans at a yield of 48.5 bpa vs. last year’s final tally of 52.1 bpa. Take that multiplied by the increase in acres and the yield will be slightly higher than last year at 4.33 bb compared to 4.30 bb last year. However, there has been a lot of chatter about flat pods, and 2-3 pods more being the norm over 4 pods. What would it take to freak out the market? If beans are seen as yielding 46 bpa or below, you are likely to get fireworks, but at this time it is too early to call. It has been reported from polls that Brazilian farmers plan to plant just under 2 million more acres of new crop beans for an estimated crop of 110.6 MMT compared to the record 114.04 MMT last year. USDA weekly soybean inspections provided support, as they came in above market expectations of 650K MT at 761,171 MT for the week ended August 24th.


Wheat has been headed for the basement the last month, as more selling continued today. KC wheat has closed lower seven consecutive weeks. While KC has been shedding longs, Chicago is adding to shorts, now close to 100K contracts short. The large Russian crop seems to be dominating traders’ thoughts, and without a lot of other news, the market has been under pressure. About the only good thing to dwell on, is the fact that the U.S. crop is very cheap on the global market which should help competition with Russian exports. USDA weekly wheat inspections were seen at 670,748 MT compared to expectations of 550K MT. Minneapolis HRS -5 ¾, Kansas City HRW -7 ¾ and Chicago SRW -9 ½ (Sept).    


Live Cattle was strong in the trade today, +.250 at 106.200 (Aug) and +1.450 at 108.375 (Oct). The hope is that a short-term low is in place. The Cattle on Feed report was basically neutral for the nearby contracts but supportive for the deferred. The key barometer was Placements, which came in at a mere 102.7%, well below the average estimate of 106.2% of last year.


Hogs were once again on the short side of the market, with pork values continuing sluggish, -1.450 at 61.625 (Oct) and –1.375 at 57.575 (Dec). The USDA pork cut-out was down 42 cents on Friday to $85.95, and down from $89.74 last week. This is the lowest value since May 17th. Speculative long liquidation selling has been the trend the last half of this month. Will February hogs be able to lead the way out?


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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