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Closing Comments

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Closing Comments

 

Corn followed weakness displayed by soybeans, -2 ¼ (Dec). Harvest is running well behind average with the weekend offering plenty of rain across parts of IL, IA, MO and MI. With about 2/3 of the corn harvest yet ahead, the market will be watching closely to see if harvest results confirm the USDA’s view of corn yield higher by almost 2 bushels. USDA weekly inspections for the week ending October 12th were strong and provided a measure of support to the market. They were announced at 1.593 MMT, with 2/3 of the total going to Mexico. Unfortunately, NAFTA negotiations do not seem to be making a lot of progress, with four of seven scheduled meetings completed. Stay tuned for results from these important talks.

 

Soybeans gave back some of the gains of the last two days with improved South American weather, -9 ¼ (Nov). Yield numbers and crop progress later this afternoon will help dictate direction for the rest of the week. Short-term downside risk is still significant, and exports will also play a role. On that note, the USDA reported a sale of 227,300 MT of soybeans to “unknown” destination for 2017/2018. USDA weekly soybean inspections were above expectations of 1.250 MMT, coming in at 1.770 MMT. The NOPA Crush Report was released today, and it showed soybean crush to be a little bit lower than expected but well ahead the levels of a year ago. It was the highest September crush in 10 years at 136.4 million bushels. Soymeal exports were well above last month’s 426,896 MT at 487,397 MT. Soyoil stocks were lower than expected and well below last month at 1.302 billion lbs. vs. 1.417 billion lbs.

 

Wheat continues to play its role as a follower to corn and beans. The winter wheats posted losses with Chicago –3 and KC -2 ½, while the Minneapolis spring variety also relented, -5 ¾ (Dec). Large supplies continue to weigh on the market, and Russia’s numbers continue to go up, with their Ag Ministry bumping their yield to 83 MMT from 81.4 MMT. USDA wheat weekly inspections were below expectations of 425K MT, pegged at 322,860 MT. For the year-to-date, U.S. wheat exports are down 10.5 million bushels or 2.6%. The 4.45-4.50 level has proven to be tough resistance for wheat to break through.

 

Live Cattle featured selling, as traders position for three key reports, -.300 (Dec). This Thursday will feature monthly Livestock Slaughter data while Friday will be the Cattle on Feed report. The monthly Cold Storage report will be on Monday. The view of 4th quarter supplies is bearish while demand is holding strong.  

 

Hogs reached new highs in the Dec contract, not seen since August 15th, +1.500. Strong demand is winning the battle with concerns over short-term supplies. Production in the 4th quarter is predicted to be up 790 million lbs from the 3rd quarter, which is 5.8% higher than last year. Will exports be able to keep pace and support the market from succumbing to pressure?

 

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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