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Closing Comments


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Closing Comments


Corn traded mostly sideways today. Ethanol production numbers for last week averaged 996 thousand barrels per day. This is down 3.5% from last week. Corn used for ethanol was 103.52 million bu. Corn use needs to average 104.33 million bu. to meet this year’s USDA estimate. The market seems to have played in some of the negative estimates expected to come out of the report on Friday. We haven’t made new lows even with the expectation that the carry out will increase. Do the funds have the power at this point to push it lower from this level? The market already expects bad news on Friday so will it have to be worse than the expectations to make new lows?


Soybeans took the brunt of the negativity today. Down double digits at one point and closing down -.08 ¾ cents. Improving forecasts in Argentina are the driving force. Rain is expected on the 12th and then another system after that is forecasted to supplement. The big question going into the report is will the USDA see it as necessary to lower our expectations for exports. Is Brazil taking the export business or does China just need that much more supply?  Soybeans definitely have risk going into the report with weather premium coming out and a very good argument to lower demand on Friday.


Wheat was the only bright spot today. Holding on to gains and closing .01 ½ cent higher vs. the March contract. Acres will be the key for Wheat in the report on Friday. Estimates are at 31.5 million acres down again this year from last year’s total of 32.7 million. Wheat has a story with winterkill concerns, and less acres being planted every year but it still has a large carryout. That fact along with the anchor that corn is right now is keeping funds from exited too quickly.


Live Cattle did not close well today. Down 107.5 vs February. Closing just a tick above their low and closing at a new low. This most likely means another leg lower. This could be seasonal or concern for short term demand from the East Coast because of the weather. Demand overall has been good with exports up over 11.5% this last year.  We should see that slow this year but should have some sustained growth as long as trade agreements don’t change.


Hogs gave some back today after making new highs. They closed .70 lower on the day bouncing off of their lows.. Hogs have been resilient and may be over due for a correction. Like cattle exports, pork exports have been strong and should stay that way barring any trade issues. Pork exports set a monthly record in November and half of the most recent expansion in the herd is being exported.


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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