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Closing Comments

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Closing Comments

 

Corn could not find support in any fresh news, but found weakness in soybeans, falling crude oil and an appreciating U.S. Dollar, -3 ¾ (Dec). Corn was slightly below the target on USDA weekly inspections, as they were announced this morning at 782,346 MT for the week of September 28th vs. estimates of 800K MT. The USDA reported a large sale of corn to Mexico for 2017/18 for 597,464 MT. The U.S. has a large freight advantage over South America, so it is hard for Mexico to take sales to the South in the foreseeable future. Corn harvest continues to progress and is expected to be announced at 21% later this afternoon, compared to 11% last week. Basis has been very wide, with elevators lacking grain ownership, river logistical issues, and the aftermath of hurricanes disrupting the Gulf – will this tighten up post-harvest?

 

Soybeans cannot seem to get follow-thru commitment from bulls or bears, giving up gains from Friday’s positive post-report action, -11 (Nov). Although this week was thought to be slower due to China being on holiday, the USDA reported a new sale to the PRC for 132K MT of beans for 2017/18. However, weekly inspections were off of expectations, as they came in at 894,250 MT against expectations of 1.1 MMT. This afternoon’s crop progress update is expected to show soybean harvest at 25% complete, up from 10% last week. Heavy rains ahead for parts of IL, IN, and OH should help with river transportation concerns with low water levels, as barges are a growing vehicle of choice this year. As always, keep an eye on South American weather as their planting progresses through October and November.

 

Wheat does not have much of a story, with the bearish Grain Stocks report results being released last Friday. This afternoon’s crop progress update is expected to show winter wheat planting up to 38% complete compared to 24% last week. The weather forecast is expected to show more moisture for the Central and Eastern Midwest, which is essential for newly planted wheat, and will also help replenish river levels for shipping. Wheat weekly inspections were the lone bright spot on the log this week, as the USDA pegged them at 691,971 MT for the week ending September 28th vs. estimates of 450K MT. Chicago soft red winter -3 ½, KC hard red winter -3 ½ and Minneapolis hard red spring -12.

 

Live Cattle was down across the near and deferred contract months, -1.825 (Dec). Burdensome supply is the topic of late, although positive packer and retail margins are providing market support. Supply fundamentals are expected to improve from the 4th to the 1st quarters.

 

Hogs persisted on a steep trajectory upward, with the December contract leading the way, +2.025. Export demand is slowing down and there is a big slaughter planned in the coming weeks. Will the market be able to absorb 3.9% more pork than last year?

 

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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