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Midday Update

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Midday Update

* The September core consumer price index (excludes food & energy) showed a year-over-year increase of 1.9% this morning, which is near the Federal Reserve’s target rate of 2.0%. That put a possible rate hike back on the table this morning, leading to a sharp surge in the dollar from seven-week low. That combined with a bearish energy stocks report to stimulate selling pressure in the major commodity indices, which pressured grain and oilseed prices. A member of the Fed has since made bearish comments about the economy, easing fears of a rate hike.

* Crude oil prices fell by more than $1 per barrel this morning after the energy inventory report showed that crude oil stocks rose 7.6 million to 468.6 million barrels in the week ending October 9. That puts crude oil stocks near 80-year highs for this time of year amid the unexpected surge in supplies.

* Ethanol stocks rose to 19.0 million barrels in the week ending October 9, up from 18.8 million the previous week and up from 18.4 million in the same week last year. Ethanol production slipped to 949K barrels per day during the week, versus 950K barrels the previous week and 885K barrels per day in the same week last year.

* The National Oilseed Processors Association reports that September member soybean crush totaled 126.704 million bushels, down from 135.3 million the previous month, but up from 99.97 million in the same month last year. A Reuters’ trade survey had pegged the average guess ahead of the report at 129.24 million bushels.

* Egypt bought another 8.8 million bushels of wheat this morning. The purchase for late-November delivery included one cargo from Romania and three cargoes from Russia. The average price was reported to be $5.77 per bushel cost and freight.

* Corn prices are 2 cents lower after breaking chart support yesterday amid sentiment that big crops get bigger and export demand is soft. The other 87% of demand is pretty solid.

* Soybean prices are 3 cents higher on strong demand into China and dryness in Mato Grosso. Forecast models hint of a possible pattern change closer to the end of the month.

* Wheat prices are 3 cents lower in Chicago, 2 cents lower in KC and 1-cent higher in MN. Wheat is consolidating while waiting for clearer direction from the outside markets.

* Live cattle futures are $1 to $2 lower after failing to sustain a rally above chart resistance. The product market is modestly higher again this morning. Packers are said to be offering $125 in the Plains, while feeders are asking $135 to $140 per cwt.

* Feeders are $1.20 to $2.40 lower on weakness in the fats.

* Lean hog futures are 30 to 80 cents lower amid a mostly steady cash market today, while product prices are softer.

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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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY(r) | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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