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Closing Comments

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Closing Comments

 

Corn exhibited weakness in the latter part of the trading session, -5 ¼ (Mar). USDA weekly corn loadings were disappointing, coming in well below the expected 850K MT at 586,213 MT. In that vein, NAFTA talks will resume later this month with Mexico and Canada. Sonny Perdue, Ag Secretary, says the President is a tough negotiator and NAFTA talks may go to the brink, but in the end the U.S. will have a better deal. He reassured that the President understands how important agriculture is to the U.S. economy.

 

Soybeans gapped higher on the chart before settling back down for a modest gain, +4 ¼ (Jan). Traders seemed to be driven by concerns of dryness in Argentina and Southern Brazil, as well as favorable technicals. Soymeal had a breakout day, providing additional support. Regarding weather, it is a little early to get too bullish, as South American beans are “made” in the late Jan-Feb timeframe. With premium being built in to soybeans’ price, the market is at an equal risk to go down if no stories develop.

 

Wheat could not overcome corn’s pull down, as all three complexes finished in the red: Chicago SRW -3 ¼, Kansas City HRW –3 ½ and Minneapolis HRS -2 ¾. The USDA reported wheat weekly inspections at 409,569 MT, well above expectations of 350K MT. Big rains in Australia over the weekend, put 4 MMT of wheat in jeopardy as predicted. And yet, investors continued to pile on to short positions. Stats Canada will release their latest production estimates on Wednesday, so look to see if numbers are increased as expected.

 

Live Cattle continued to show weakness after a sharp drop and a new low on Friday, -.850 (Dec). Exports last week, although respectable, were not enough to prop up the market. Beef demand post-Thanksgiving has been disappointing, as normally the industry would expect firm demand and declining production into the holiday season.

 

Hogs showed weakness in Dec (-.325) while gaining in the deferred months, Feb +.950. Managed money traders hold a substantial net long position, and Feb futures are priced well above the Lean hog index (71.550 vs. 62.990), leaving the market vulnerable if technical support levels are violated. Supply fundamentals continue to look bearish for the next several weeks.

 

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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