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Closing Comments


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Closing Comments


Corn traded in the lower half of the range established over the last two months, finishing even (Dec). Exports are making a valiant effort to catch up, as year-to-date sales are well behind last year’s 11.74 MMT, at 6.58 MMT. Will WASDE have to adjust U.S. stocks “up” next report? There is significant opportunity with China on the horizon with unconfirmed reports of them booking 500K MT last week. Managed funds are still holding a very large net short position, estimated at 245K contracts leading into today’s trade. Crop progress reported yesterday afternoon indicated we are 90% harvested, with an estimated 7.8 million acres to go.


Soybeans have experienced choppy trade this holiday-shortened week, -1 (Jan). South American weather has become a non-issue at this juncture, as both Brazil and Argentina are in decent shape with promising forecasts in the near-term. However, there is talk of La Nina forming, which could have a definite impact later in the growing season. The bears have cast their short lots with corn and wheat, while funds have remained long in beans. The market got a boost from a USDA reported private sale to China of 130K MT for 2017/18. However, this is the first reported sale since 10/27 and beans exports are running behind year-to-date.


Wheat was up across the winter complexes today, finding support in crop ratings and news out of Russia. USDA winter wheat crop conditions released yesterday by the USDA showed the rating reduced from 54% good/excellent to 52%. This compares with 58% last year. In Russia, their weather bureau confirmed a drastic increase in radioactivity on the heels of some sort of nuclear event in late September or early October. There is denial by Russians and Kazaks of any kind of accident at nuclear facilities, and it was likely related to the processing of spent fuel for research purposes, according to AgResource. This is not a new story but recent headlines gave it some traction today. The Ukraine wheat crop is actually in better shape than last year, due to better topsoil moisture this year. Chicago SRW +2 ¾, Kansas City HRW +4 ¼ and Minneapolis HRS – ½.


Live Cattle took a pause from their steep decline, +.875 (Dec). Large supplies and no sign of a short-term low have been propelling the market lower. Aggressive selling has been the focus, as the Commitment of Traders report showed speculators with significant long positions heading into the Cattle on Feed report, which was bearish. Traders are anxious over potential increases of already plenteous short-term supplies.


Hogs rallied yesterday on smaller than expected slaughter pace the past few weeks. Pork values are trending higher and hog weights bear monitoring to confirm the theory that hog supplies backing up. If not, the recent Hogs and Pigs report may have overestimated the pig supply, according to Hightower. However, today showed a large correction to the downside with a technically bearish engulfing bar on the chart, -1.325 (Dec). Stay tuned to see if hog futures can resist the impetus to roll over.


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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