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Closing Comments


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Closing Comments


Corn bears have remained in control, as the March contract continues its descent lower, -1. December went off the board at 3.36 ¼, which will now be the downside target for the March contract. From a technical perspective, momentum indicators are declining but also in oversold territory. The USDA announced a sale of 134,503 MT to Costa Rica. Low prices and a relative weak Dollar are keeping the U.S. competitive, and export sales are sorely needed by all the grains to catch up to USDA yearly projections. Watch the South American weather forecast and results closely next week.


Soybeans were unable to post positive numbers to end the week, – ½ (Jan). A bright spot included a pair of export sales, one to China for 257K MT and another to “unknown” for 126K MT. The NOPA Crush report showed a record amount of beans crushed in November at 163.55 mbu. Soyoil stocks were over expectations of 1.270 billion lbs at 1.326 billion lbs. However, this is lower than last year’s 1.339. The soyoil yield was 1.2% below the WASDE forecast, estimated to be 11.46 lbs/bu. Overall, the report was viewed as mildly bearish soyoil and slightly bullish soybeans. The market will be closely watching three weather fronts scheduled to cross Southern Brazil and Argentina over the next seven days. Expect the market to react either up or down in the short-term.


Wheat was mixed, finding support in a sale and less acres predicted for next year, Chicago finishing EVEN. The USDA announced a sale of 130K MT of U.S. soft red winter to an “unknown” buyer. All sales are welcome, as the U.S. and rest of the world battle the Russians at every turn. If Informa is right, wheat acres planted in the U.S. in 2018 will be down from last year’s record low of 46 million acres to 44 million acres. Informa estimates winter wheat plantings will total 31.1 million acres compared to 32.7 million last year. And, last year was the lowest acres planted in over 108 years. Kansas City HRW ended – ¾ and Minneapolis HRS +3 (Mar).


Live Cattle finished the week with a bang, +1.875 (Feb). Typically, cattle rally into the April timeframe, but it may be difficult for sustained rallies due to the supply glut. Longer term, the concern is with large grain carry-outs on hand, and if we were to have another record crop year, prices will be driven down which could lead to overfeeding and more tonnage of animal weights. For some, it may be worth considering hedging the latter half of 2018 proactively, with attractive 1st quarter levels. 


Hogs followed yesterday’s volatile trading range with another gain, +.900 (Feb). Getting speculators attention, export sales up for the week of Dec 7th over the average of the last four weeks and 6.8% above last year, as well as a decline in average hog weights last week. Hog production for the week ending Dec 2nd was 546.6 million lbs, up 20.42% from a year ago.


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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