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Closing Comments

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Closing Comments

 

Corn moved down in concert with the other grains, -2 ¼ (Dec). Corn futures are in a very short position, as maintained by managed funds, at close to 200K contracts. The general sentiment is that the USDA will bump up corn yield next Thursday – will U.S. ending stocks eclipse 2.4 billion bushels vs. October’s forecast of 2.34 billion bushels? The USDA reported a private sale of 135K MT of corn to South Korea for 2017/18 and a 102,400 MT of corn to Mexico. Adding to the exports sales log was a transaction of 251K MT of sorghum to “unknown”. Look for next week to continue range-bound leading into the Report.

 

Soybeans gave back all of yesterday’s gains with fund selling taking center stage, -12 ½ (Jan). Today’s trade featured profit-taking and funds paring off some of their long positions heading into the weekend. South American weather continues to be center stage, and it is favorable for crop planting in both Brazil and Argentina, with Brazil slated to receive needed precipitation and Argentina drier forecasts. While many are anticipating a decline in soybean yield estimate by the USDA next week based on declining later-planted crop yield reports, private analyst projections from Informa and FC Stone did not reflect any surprises. Until next Thursday, expect more sideways chop in the market.

 

Wheat was mixed today, as HRW got a bit of good news. Chicago finished slightly down, – ¼. Kansas City HRW was +1 and Minneapolis HRS +3 ½. The USDA announced a sale of 300K MT of hard red winter to Iraq for 2017/18. They have bought a total of 450K MT of HRW from Cargill and ADM. The latest news from Russia included their Ag Minister estimating the wheat crop at 87.9 MMT compared to 75..8 MMT last year, with harvest 99% finished. Russia is planning to launch new support measures aimed to facilitate grain shipments from Siberia, the Urals and Volga Valley, according to Hightower. If they are able to solve some of their logistical issues, they will continue to be an even more formidable global competitor.

 

Live Cattle did a complete about-face after yesterday’s decline, almost going lock-limit up, +2.975 (Dec). The move was counter-intuitive, as many believed yesterday’s downside reversal may be signaling the end of the steep uptrend. Export sales and beef values have continued to gain, while steer weights are down from last year. Weights are climbing though, and this coupled with higher production are bearish factors.

 

Hogs were down for the third consecutive day, as some traders took profits and shed long positions in the overbought environment, -.700 (Dec). As discussed previously, hogs are weighed down by record supplies increasing weights, but buoyed by a highly valued pork cut-out and strong exports (up 6.9% over last year). The market is vulnerable in its overbought condition if pork values were to begin trending lower.

 

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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