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Closing Comments


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Closing Comments


Corn found strength in export sales and action in soybeans, +1 ¼ (Dec). Futures were able to close on trendline support in the 3.49-3.50 area (Dec). Weekly export sales did not disappoint as they were a net 814,100 MT compared to expectations of 500K-700K MT. Mexico and Korea in particular stood out with larger demand than anticipated. Informa came out with their monthly update, showing corn yield increasing slightly to 170.5 bpa compared to 169.7 bpa in September. The Commitment of Traders report tomorrow will show corn’s most recent fund position, as the shorts have increased by around 80,000 contracts since August.


Soybeans enjoyed double-digit gains today paired with solid soymeal gains, +10 (Nov). USDA weekly export sales were on the low end of expectations between 1.0-1.3 MMT at 1.016 MMT. Expect sales to pick up the second half of October as China comes off their holiday week and U.S. river transportation starts to free up. Yield reports over the last few days for some of the later planted beans have not been as impressive. However, Informa came out with their most recent numbers, and they gave soybeans a slight bump, up to 50.0 bpa from 49.9 bpa. According to AgResource, the key will be combined reports from later planted crop in the E Midwest where they received only 20-30% of normal rainfall in August and September.


Wheat struggled against the rising Dollar and large supplies in the two winter varieties, Chicago -1 ¼ and Kansas City -1 ¾. Minneapolis spring wheat was the star of the complex, gaining +5 ½ (Dec). Russia’s Ag Ministry sees their crop at 81.4 MMT vs. the USDA’s 81.0 MMT. The large Russian crop is not fresh news, but continues to weigh on the wheat complex. The European Commission and the U.K. farm ministry both upped their production forecasts. Weekly export sales were on the high end of estimates, as they were announced at 492,300 MT compared to thoughts of 250K-500K MT. The most notable buyers this week were the Philippines, China and Japan.


Live Cattle found support in continued strong packer margins, +1.125 (Dec). With these margins, packers are keeping the slaughter rate up and have been willing to pay higher cash. But, keep an eye on large short-term supplies and the premium Dec cattle is holding to the cash market.


Hogs continued to find buyers, in spite of the large premium futures are holding over cash, +.900 (Dec). Traders took futures to the highest close since August 16th. Will cash rise to justify the premium of futures, or does the market have more downside in store?


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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