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Closing Comments


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Closing Comments


Corn could not find any market drivers to alter its sideways course, + ¼ (Dec). The industry is waiting for harvest results to help clear the dust created by differing opinions on yield. Only about 10% of the crop is harvested to-date, with the majority of growers reporting a good crop but lower results than last year. It is likely many questions will remain unanswered until the October 12th USDA Crop Report. Weekly export sales reported by the USDA were disappointing, as they fell below expectations of 700K-1.0 MMT at 526,900 MT. The overabundant South American crop has proven to be a big hurdle this season compared to last year. So far, the U.S. has sold 11 MMT compared to 17 MMT at this time last year. Add to that a strengthening Dollar, selling corn on the world market will be even more challenging. Ethanol margins have declined slightly, but are still at a profitable level of around 15 cents/gallon.


Soybeans fought off losses in the overnight, and were able to right the ship by session end, + ¾ (Nov). USDA weekly export sales were above and beyond expectations, as demand has pushed back against bearish supplies. Sales were reported at 2.338 MMT vs. estimates of 1.2-1.5 MMT. In that vein, the USDA reported a private sale this morning to China of 132K MT for 2017/18. Bean yields have continued to roll in, and the theme continues that yields are better than expected for the conditions this year, but behind last year. Two key reports to mark on the calendar are the September 29th Grain Stocks and the October 12th USDA Crop Production/Supply & Demand. Market direction will continue to become clearer with actual data in the days ahead. In the meantime, Twitter and other social media are providing the hype!


Wheat led the grains, finding support in a weak Dollar, Australia’s continued declining crop prospects, and rising global FOB offers: Chicago SRW +2 ¾, Kansas City HRW +1 ½ and Minneapolis HRS +4. Weekly export sales came in at the low end of expectations, as the USDA tallied wheat at 307,200 MT compared to the market’s estimates of 300K-500K MT. To put in perspective, last year at this time the U.S. had average export sales of around 516K MT/week compared to only 332K MT/week this year. While the dryness in Australia has caused a rise in their wheat prices (giving the U.S. a rare advantage at this point in the season), this advantage is offset by the Black Sea Region continuing to trade well below U.S. values.


Live Cattle was not able to sustain yesterday’s near limit-lock-up momentum, as October had the largest setback (-.850), while the deferred months mostly showed gains, save a small loss in Dec. Tomorrow will feature key reports and today saw traders jockeying for position. Reports include Cattle on Feed and Cold Storage, with Cattle on Feed expected to show: On Feed 103%, August Placements 97% and Marketings 106%.  


Hogs continued their volatile trajectory, with a large corrective move down after a couple of days of solid gains, closing –2.125 (Dec). Yesterday’s high could be important resistance if the market is to find a bottom and a new direction upward. Until then, the overall trend is down, with large short-term supplies weighing on the market.


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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