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Closing Comments

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Closing Comments

 

Corn felt the pressure of languishing wheat prices as traders bolstered short positions ahead of the report tomorrow, -3 ¾ (Mar). The December USDA report is not typically a market-mover, as no adjustments are expected to production, with the focus on demand estimates. Record ethanol production will be considered in contrast to lagging exports, and the net result will likely add to stocks’ totals. Weekly Export Inspections gave corn a boost today, as loadings were reported to be 658,403 MT, besting estimates of 625K MT. The USDA also reported a private sale of 110K MT of corn to Mexico for 2017/18.

 

Soybeans battled forecasts of wetter weather in Southern Brazil and Argentina, -7 ¼ (Jan). Expectations for the report tomorrow include WASDE increasing estimates of ending soybean stocks, due to poor export numbers thus far. However, there are rumors that China may be way behind and under-covered for their needs – will the next few weeks bring a flurry of sales? Regarding South American weather, the general prevailing thought is that La Nina is here to stay, but it is still early to make too many deductions. Weather is the main story left with potential lasting impact, with meal crushing rates and soyoil also possibly providing support. The USDA reported a private sale of 132K MT of beans to “unknown” destination for 2017/18.

 

Wheat sunk to new lows on technical selling, as traders piled on short positions, -5 ½ (Chicago March). Russia is continuing its dominance over the rest of the world with record exports resulting from record yields. In that vein, the USDA announced weekly wheat loadings for the week ending Dec 7th at 316,867 MT, under estimates of 400K MT. Kansas City hard red winter and Minneapolis spring also lost ground again today, -5 ¼ and –4 ½ respectively.

 

Live Cattle continued its orderly march lower, -.575 (Feb). From a technical perspective, the market is oversold, but speculative investors still hold a large net long position. The cash market is exhibiting weakness, weather is leaning bearish, and consumer demand may wane into the holidays.

 

Hogs fell down to the 100-bar moving average on long liquidation selling before finding their footing, closing –1.825 (Feb). The Commitment of Traders report on Friday, showed managed funds as of Dec 5th, holding large net long positions. The market is in correction mode as animal weights and slaughter are both up from last year, giving the market a bearish tilt.

 

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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