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Closing Comments


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Closing Comments


Corn continued its uninspired trade to end the week, +1 ½ at 3.56 ¾ (Dec). All eyes are on the USDA report Tuesday, and what/if any significant changes are in store. Average trade estimates show a yield of 168.2 bpa compared to the previous USDA estimate of 169.5, and a crop of 14.035 bbu compared to the previous USDA number of 14.153 bbu. Corn ending stocks are expected to decrease to 2.340 bbu compared to 2.370 bbu previously. Exports were a leading story of the day as the USDA weekly report came out a day later this week due to Labor Day. Carry over sales from 2016/17 were 1.010 MMT, while 2017/18 weekly sales as of August 31st were 1.480 MMT, well over estimates of 700K-1.2 MMT. Adding to this was an announced private sale this morning of 179,324 MMT of corn to “unknown” destination.


Soybeans persisted in giving back another portion of its recent gains, losing –6 ¾ cents (Nov). Traders have not had a reason to get excited other than to point to next week’s report. Their average estimates include a 48.8 bpa, which is a small decrease from the previous USDA number of 49.4 bpa. This would put the crop production at 4.328 bbu compared to 4.381 bbu. Ending stocks for 2016/17 are expected to be unchanged. The USDA released their weekly export numbers, and they showed carry over sales from 2016/17 of 2.359 MMT. Net export sales for the week ending August 31st came in at 1.523 MMT, well over expectations of 500K-1.0 MMT. Additionally, the USDA announced a private sale of 264K MT of soybeans to China for 2017/18. The recent decline of the Dollar into new lows has provided support to all grain exports, as competing currencies have remained relatively stable.  


Wheat ended the day positive, as it has tended to be a follower as of late. The weak Dollar provided a measure of support to the market, while declining crude prices provided a counterbalance. The report next week will likely not be as impactful to wheat as to corn and beans, as the trade is estimating a modest decrease in 2017/18 U.S. ending stocks from 933 mbu last month to 920 mbu. Large global supplies have been a damper to rallies. USDA weekly export sales as of August 31st were 375,500 MT, on the low end of expectations of 300K-600K MT. Buyers included Korea, Nigeria, Japan, Philippines and China. Minneapolis HRS -5, Kansas City HRW – ¼ and Chicago SRW + ½.


Live Cattle built on yesterday’s gains, +1.100 (Oct). There are large supplies to overcome in the short term, but February has a better outlook. Average dressed steer weights for the week ending August 26th tallied up 887 lbs, which is below last year’s 893 but above the five-year average of 882.2. Cattle slaughter and beef production are both over last year.  USDA boxed beef values are up, which is seen as supportive to the cash cattle market.


Hogs made a positive correction today, as this week has featured large swings in both directions, +.700 (Oct). USDA pork cut-out values continue to fall, as they were down 89 cents after the close yesterday to $82.42. Bellies were down $1.89. Slow monthly exports and increasing hog weights have helped contribute selling pressure this week. On the other hand, the large discount of futures to cash is providing support.


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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