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Closing Comments

 

Corn continued range-bound trade as producers battle with weak interior basis levels, -2 (Dec). Corn harvest results reported by the USDA yesterday were much less than expected at 17% complete, which is 9% behind the 5-year average. It was found that 68% of corn is black-layered, which is down significantly from 84% last season at this time and 78% average. Crop conditions were upped by 2% to 63% good/excellent. FC Stone, who had come out with one of the more bullish projections earlier in the season, gave an update showing corn yield improving to 169.2 bpa from their original 166.9 prediction. In this scenario, the overall crop would be 14.129 bbu, which is not far off from the current USDA stance. River transportation issues continue to be a problem on the Illinois, Ohio and Mississippi Rivers, with low river levels and slow movement to the Gulf.

 

Soybeans traded both sides before finishing in the red, -2 (Nov). Soybean harvest was reported by the USDA to be 22% complete, slightly behind last year’s 24% and 26% average year-to-date. Harvest reports have indicated early planted beans are showing the best results so far. There were no new export sales announced today, as China continues their Golden Week festivities. Brazil is getting much needed precipitation which will help with planting and germination over the next couple of weeks. The important growing area of Mato Grosso is also predicted to receive much needed rain.

 

Wheat was back in a more positive frame of mind, up across all three varieties. Yesterday finished on a more positive note for the winter wheats and this combined with Russian prices coming up were positive factors for the market. Winter wheat planting made good progress over last week according to the USDA, as they announced it at 36% complete compared to 41% last year and 43% average year-to-date. Egypt also announced they are back in the market for another shipment of 3 cargos of wheat for early November shipment. Russia won the sale, with the six lowest bids. The strengthening U.S. Dollar is not helping the American cause in the competitive international market. Chicago +3 ¼, KC +2 ½ and MN +1 ½.  

 

Live Cattle was able to stay positive in the face of a soft cash market, +1.475 (Dec). Technical indicators are weak. Futures are holding a large premium to the cash market. Supply is also burdensome, which will likely mute short-term rallies.

 

Hogs continue to rally in spite of the large seasonal supply ahead, led in large part by the front month, +2.625 (Oct) with Dec also gaining +.100. Technical action on the charts is strong, but will it sustain? Normally, this time of year there is a downtrend in cash. December hogs are building a large premium in futures vs. the cash market. Typically, the trend is a futures discount to cash by an average of $10.15, while this year there is over a $7 premium of futures to the cash 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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