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Closing Comments

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Closing Comments

 

Corn followed beans’ lead and found support in exports, + ½ (Dec). USDA weekly corn export sales were above the range of estimates of 750K-1.1 MMT at around 1.3 MMT. Of the total, Mexico made up about half, with Japan and Latin America comprising the difference. However, corn exports still lag behind last year by 34%, as Brazil has a price advantage to Asian destinations. The talk about possible reductions by the EPA to the RFS mandate, which would negatively affect U.S. biofuels, has effectively been quashed at this time which is good news for ethanol.

 

Soybeans found strength today in exports and a positive feeling on RFS, +2 ¼ (Nov). The USDA reported a private sale of 384K MT of soybeans to China for 2017/18. On the weekly export sales log, the USDA penciled in beans on the low end of the range of estimates of 1.25-1.75 MMT at 1.275 MMT. However, both meal and oil were on the high end of estimates. Brazil weather is still creating a measure of uncertainty with weekend rains scheduled this weekend for the western part of Mato Grosso, but it will possibly be later this month before substantial rains arrive. The Renewable Fuel Standard will stay unchanged, as President Trump called the IA Governor to affirm his support for U.S. biodiesel. The U.S. Commerce Dept. plans to announce tariffs later this week on Argentina biodiesel due to dumping into the American market.

 

Wheat found support in exports, as China showed up on the sales log with a purchase of two cargoes of spring wheat. The USDA weekly report pegged wheat sales at 615,400 MT compared to estimates of 250K-500K MT. Notable buyers of U.S. wheat included Mexico, China, Japan and Iraq. Egypt’s GASC was in for wheat for the third consecutive week, likely sourcing from the Black Sea Region. Chicago SRW +2 ¾, Kansas City HRW +1 ¼, Minneapolis HRS +5 ¾.

 

Live Cattle had a setback today, as traders position in front of the Cattle on Feed Report tomorrow, -.500 (Dec). The data will be as of October 1st and will reflect metrics from the month of September. The marketing rate has a wide range of estimates and will be essential for market direction, as it is imperative to stay current on the front end. Estimates for the report include: On Feed 104.6%, Placements 108% and Marketings 102.6%.

 

Hogs achieved a new high today not seen since August 15th, +.500 (Dec). A new report from Rabobank is forecasting an increase in the pork sector of 11% over the next 8 years, based on increasing efficiencies and growth in processing capacity. A good part of the expansion is based on expectations of export growth, with Mexico being a leading importer of U.S. pork. However, NAFTA negotiations are not making much progress, leaving an air of trade uncertainty.  

 

In Other News, the EPA came out with new regulations for dicamba in 2018. Manufacturers have agreed to label changes including only letting certified applicators with training and those under their supervision use dicamba with a restricted use label. Farmers will also be required to keep records of dicamba use and may only apply the product when wind speeds are under 10 mph to reduce drift potential, and will be limited to using only during certain hours of the day. There will also be text pertaining to tank cleaning and more language around contaminating sensitive crops.

 

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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