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Closing Comments


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Closing Comments


Corn found more weakness heading into First Notice Day on Thursday, -2 ½ (Dec). Tomorrow will be “Position Day” for Dec delivery, with expected more market pressure. The final crop progress report of the 2017 season showed harvest 95% complete, compared to 98% on average. Iowa and Wisconsin have the largest amount of acres left to be shelled. Based on the Commitment of Traders report and action of the last few days, corn shorts held by funds are estimated at 260K contracts. China has surprised with recent large corn orders, as it is thought 10-12 cargoes of U.S. corn were purchased, due to their domestic prices being high. With corn this cheap, China may be in for more – stay tuned.


Soybeans trended lower but were able to pare losses coming into the finish, -3 (Jan). This brings futures back to below even for the week, as traders await news that could spur action. Will the rumor of Chinese imports slowing down due to their GMO safety certification process or their need to buy heavily in the next 2-3 months (to catch them up for the Dec-Jan-Feb timeframe) win the day? Demand continues to be the key for beans, and traders are a bit anxious over the deficit of export sales to what was expected over the first ten weeks of the marketing year. Watch for the EPA RFS mandate announcement and also how tariffs on biodiesel imports will influence the market in the near future.


Wheat pushed down into new lows, led by Minneapolis spring wheat, -7 ¾ (Dec). The winter wheats were able to rebound into the close with Chicago SRW +1 ¼ and Kansas City HRW +2. The COT report showed managed funds are still holding significant shorts as of last Tuesday, at around 109K contracts (Chicago). Russia won another bid for Egyptian business, as the GASC announced they bought 120K MT of Russian wheat. Egyptian offers were a couple dollars lower than their last tender, which is not a positive for the wheat complex. Russia is vying aggressively to sell their record-size crop and are willing to meet low price levels, making it difficult for the competition to keep up.


Live Cattle had a small setback, but also showed selling indecision, as evidenced by the “hammer” bar on the chart, -.175 (Dec). Expected large 4th quarter production is keeping things in check, while the Christmas season will help to support retail beef sales.


Hogs rose sharply for the 4th consecutive session, +1.225 (Dec). While the trend is up, the market seems to have adequate supply, assuming accuracy of the Hogs & Pigs report. The CME Lean Hog index has continued to drop (63.66), and Dec futures have now risen above the Index by over 2 dollars.


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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