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Closing Comments

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Closing Comments

 

Corn traded both sides of unchanged before finishing, – ½ (Dec). Corn weekly export sales exceeded estimates of 750K-1.25 MMT with 2017/18 sales of 1.288 MMT and 2018/19 of 96,800 MT. Buyers of note included “unknown”, Japan, Mexico, Korea, Spain and Peru. The corn market is very competitive this year as the U.S. is vying for sales with Argentina, Brazil and Ukraine. Worldwide corn supplies seem to keep on growing, as the International Grains Council raised their overall 2017/18 crop forecast by 5.2M MT to 1.034B MT. It is thought that managed funds are 200K contracts short corn, as they are banking bearish yield and stocks news ahead.

 

Soybeans dropped off sharply into the close, -4 ¼ (Nov). The USDA announced weekly soybean export sales well over expectations of 1.25-1.6 MMT at a whopping 2.129 MMT. Of no surprise, China comprised 1.576M MT of the total. Soybean oil was slightly above estimates while soymeal was on the low end of the expected range. The Rosario Grain Exchange in Argentina estimates that their farmers have forward contracted 5% of 2017/18 soybeans, which is high for this time of year. However, they are only 66% sold on old crop in comparison the average year-to-date of 74%. Traders are awaiting news of any yield reductions or change in usage that will fire up the market. The next big opportunity is the USDA Report on November 9th.

 

Wheat showed weakness today, as the Dollar rose sharply to a high not seen since mid-July, SRW –3 ¾ (Dec). Global supplies continue to weigh on the market. The International Grains Council did nothing to boost optimism, as they pegged 2017/18 global wheat crop at 748.5 MMT compared to their previous estimate of 747.6 MMT. USDA announced weekly wheat export sales showed improvement, with just over 390K MT (30K MT for 2018/19) vs. estimates of 250K-500K MT. Kansas City HRW and Minneapolis HRS were also down -5 ¼ and -1 respectively.

 

Live Cattle seem to have their eye on the bullish outlook for the 1st quarter, +1.625 (Dec). Large short-term supplies do not seem to be hindering cattle futures advancement in the least. The beef cut-out is rising in value, up to $200.21 which is the highest level since August 10th.

 

Hogs continued to nudge higher and will probably continue to do so until the pork cut-out turns down, +.575 (Dec) and +.925 (Feb). While Dec hogs look overbought and overpriced, cash hogs remain strong. Exports are the key and recent news has had a bearish flavor, especially from China. But, positive vibes from cattle are flowing over into the hog market, so watch closely to see if there will be a peak in cash.

 

Closing Market Snapshot  

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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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