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Closing Comments

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Closing Comments

 

Corn has been a follower of late, and this continued today with lackadaisical trade heading into Report Day tomorrow, -1 ½ (Dec). USDA weekly corn sales were a bit disappointing, as estimates ranged from 500K-800K MT, but results reported were 320,200 MT. Corn has been battling the glut of South American crops this year in comparison to last year, so the results are not surprising. For the marketing year-to-date, U.S. corn sales are down 39%. However, corn had a nice daily sale this morning to an “unknown” buyer of 233,800 MT for 2017/18. The EPA has been signaling that they may make a change that would affect the number of RINS available, which could work against higher ethanol blends in the U.S. The move would be friendly to exports but not helpful to the domestic industry. The uncertainty is not helpful, but it is not likely that corn used for ethanol would change much in the next 1-2 years.

 

Soybeans were not able to find any energy in spite of great export sales numbers, -6 (Nov). Weekly export sales data showed soybeans well over expectations, as it was estimated that weekly sales would fall in the range of 1.8-2.2 MMT, but instead results surprised with over 3 MMT. The USDA reported another new sale this morning – a private sale of 132K MT to “unknown” for 2017/18. Chinese demand continues to grow, as their orders are increasing to all origins. While U.S. bean sales are still 15% below last year, the gap is closing quickly.

 

Wheat trade featured a correction of an overbought condition heading into the key Grain Stocks report tomorrow. Chicago -6 ½, Kansas City -6 and Minneapolis -5 ¾. Wheat weekly export sales were on the high end of expectations, as the USDA  pegged them at 435,600, on the upper end of estimates of 250K-450K MT. At this pace, wheat will be able to meet the USDA expectation for the year. When Black Sea shipments slow-down in the coming winter months, U.S. wheat demand should get its usual bump up. In Australia, a large chunk of the wheat growing area is still trending dryer into the first week of October, which is not helping their prospects.

 

Live Cattle moved forward another small step after yesterday’s big gains, +.400 (Oct) and +.150 (Dec). There is still plenty of supply to deal with, but demand is good as packer margins are remaining strong. Cash cattle have also tended slightly positive. Will the market be able to avoid a long liquidation sell-off?

 

Hogs fell back toward the middle of the range (deferred months) they have been trading in recent weeks after solid gains the last three days, -1.375 (Dec). The Hogs & Pigs Report later this afternoon will be key to direction moving forward. December hogs have been trading at significant premium over the October contract, which has not happened since 2012.

 

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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