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Closing Comments

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Closing Comments

 

Corn ran out of sellers in the short-term, +12 ¼ at 3.57 ¾ (Dec). The market reached a key level of technical support yesterday and turned back north today, as fund short-covering and new buying led the way. According to AgResource, 190,000 changed hands by midday. Corn had another good week on the export sales rolls as it was announced by the USDA that 2016/17 sales came in at 188,400 MT while 2017/18 came in at 804,200 MT. Estimates ranged from 450-900K MT. Weather will play a lesser role through harvest, unless the outside chance of a frost in the northern Midwest materializes. Currently, forecasts are not showing temperatures below the mid-thirties.

 

Soybeans found support as September futures ended, sending beans to a double-digit gain, +12 at 9.45 ¼ (Nov). It is a bout between Supply vs. Demand, as the U.S. crop is likely to produce near record yields due to more acres planted this year. Soybeans had another strong week of export sales, with China stepping up their game aggressively, as the USDA reported 2016/17 sales of 123,200 MT and 2017/18 sales of 1.559 MMT. Estimates were 400K-1.7 MMT. New crop customers included China, Thailand and “unknown”. The USDA also reported another private sale today of 132K MT of soybeans to unknown destinations for 2017/18. Stats Canada showed soybeans down slightly to a production of 7.74 MMT compared to expectations of 7.9 MMT. Last year’s Canadian bean crop was finalized at 6.46 MMT.

 

Wheat experienced a recovery bounce in the winter variety, with Kansas City +7 and Chicago +4 ¾ (Dec). Exports continue to benefit from low U.S. prices coupled with a weak Dollar. The USDA announced weekly sales at 566K MT (530K MT 2017/18), on the high end of expectations of 300-600K MT. Buyers included Japan (largest buyer), the Philippines, South Africa, Indonesia and Mexico. China did not buy wheat this week and Algeria was small participant. The Stats Canada report was mildly bullish to HRW and SRW. Stats Canada is a compilation of farmer surveys between July 19th and August 1st. Their estimate for all wheat was 25.541 MMT vs. 31.729 MMT last year. The question asked by some is if the Canadian numbers will only get smaller from here? Minneapolis was under pressure overnight from huge deliveries in conjunction with month end, and that continued today, -15 ½ (Dec).

 

Live Cattle are seeing a battle of bearish supply fundamentals and an expected significant drop in 1st quarter production. Heavy rains in the forecast, especially on the East Coast and the Ohio River Valley, are prompting concerns of reduced holiday demand this Labor Day weekend. The October contract was down -.725 .

 

Hogs stayed in a positive posture after yesterday’s reversal, +.050 (Oct) and +.825 (Dec). With a 10 ½ month low achieved, is a short-term low in place? February will lead the way as a huge reduction in production of 465 million lbs is expected from the 4th quarter to the 1st quarter.

 

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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