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Closing Comments


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Closing Comments


Corn had another listless day of trading, – ½ (Mar). Export inspections were nothing to “write home to mom about,” coming in well under the expected 700K MT at 594,281 MT. In related grasses, China picked up 168K MT of sorghum in a private sale for 2017/18. Corn seems to be finding support in the upper 3.40’s zone. Hopefully a story will emerge to help scare managed funds out of their large net short positions, which are estimated around 200K+ contracts. The CBOT recently lowered margin requirements for corn futures, maybe a good sign that the market will not go much lower?


Soybeans saw more liquidation with weather in South America not offering any new morsels to tantalize buyers, -5 ¾ (Jan). A drier bias for Argentina and Southern Brazil towards the end of the month could provide fodder to reverse sentiments. Argentina is way behind soybean planting, and typically anything planted after Dec 15th yields less, according to AgResource. Declining meal prices also provided weakness, as investors shed excessive fund length. USDA weekly inspections provided a boost, as they were well over expectations, coming in at 1,774,555 MT for the week ending Dec 14th vs. estimates of 1,350,000 MT. Some fundamentalists think that China may be way under bought for the Jan-Feb-Mar timeframe, but only time will tell.


Wheat continued where it left off last week with modest, incremental gains, +2 ¼ (Chicago March). Kansas City HRW and Minneapolis HRS were mixed, +1 ¾ and -1 ¼ respectively. It will be worth watching the Plains and W Midwest after Christmas, with bitterly cold temps forecasted. This could have an effect on HRW wheat and will be watched closely. Wheat did well on export loadings this week, as the USDA announced inspections of 585,637 MT, well over estimates of 350K MT. Russia’s prices have been hard to beat, as they are down around a dollar from last week in response to an aggressive Romanian offer to Egypt’s GASC.


Live Cattle had a setback today to start the week, -.425 (Feb). It was thought leading into today’s session that new strength in the cash markets and expectations for a drop in beef production in the next quarter could be enough to spark February futures, according to Hightower. The Cattle on Feed report will be watched with anticipation this Friday, to see if large placement numbers are confirmed.


Hogs shed some length ahead of Friday’s Hogs and Pigs Report, -1.125 (Feb). It was thought today may feature gains, with a recovery in the cash pork market, however, the burden of short-term supplies won out. Some positives to consider include ham and belly prices rebounding, a decline in hog average weights last week and news that China’s pig herd is down 6.3% and sows down 5.6% from last year.


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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