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Closing Comments


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Closing Comments


Corn harvest is expected to make significant gains from last week to this week in the Monday afternoon crop progress update, estimated at 55-60% complete, as the Western corn belt experienced great weather the last few days. The December contract was able to claw its way to draw, finishing even on the day. While yields have continued to trend up, high winds and winter storms may have a modest impact. USDA inspections were on the low side for corn, as they came in at 517,679 MT for the week compared to expectations of 700K MT. The Commitment of Traders report on Friday showed managed funds continued sellers of another 10K+ contracts, taking their position to an estimated 230K contracts short heading into last weekend. However, farmer length is offsetting, as the two battle in a tug-o-war. Technically, corn has been trading in a 20 cent range for the last couple of months – look for short-term resistance around 3.60 in Dec.


Soybeans were strong in the overnight but could not sustain through the session, -2 ½ (Nov). The range bound trade has exhibited a pattern of farmers selling the upside and end users pricing the downside. Soybean inspections once again were above market expectations, coming in on the USDA weekly log at 2.505M MT vs. 2.200M MT estimated. However, there were no new export sales announcements this morning. Technically, the November contract has been trading in an upward-trending channel, but time is short until expiration. The 10.20 area is a target area if the market were to get some news that propels action, or the 9.50-9.60 area would be a potential downside if slowed Chinese buying and a stronger Dollar weigh more heavily.


Wheat went lower still on continued fund selling, as world wheat prices push lower. The U.S. Dollar finally showed some weakness, providing a measure of support. Wheat inspections were announced on the low end of the estimated 400K MT, as the USDA pegged the weekly tally at 315,317 MT. Can we get a technical bounce to 4.70-4.90 in Dec for KC and Chicago? Minneapolis has been trading sideways as the market looks for protein news to latch onto. Results: Chicago SRW -2 ½, Kansas City HRW -3 ½ and Minneapolis HRS + ¾.


Cattle are in no mood to check their torrid pace until the beef market turns down, +2.575 (Dec). The USDA boxed beef cut-out values continue to climb, closing 93 cents higher on Friday to $203.30. Dec has now matched the June high and gapped higher through resistance in the 122 area. However, the premium of futures to cash may be too wide and bears monitoring.


Hogs have had an increased volume of buyers and speculators enter the market with its impressive action of late. The Lean Hog Index has experienced an impressive counter seasonal rally in October. Both Dec and Feb were up again today, +.725 and +.800 respectively. The market is overbought, but if the expected demand shows up, hogs may just continue their march.


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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