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Closing Comments

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Closing Comments

Corn headed higher on the morning bell and didn’t look back as short-covering positioning ahead of the weekend regained much of this week’s losses. Harvest has had a spotty start due to rains. Early reports are regional in nature – pockets in Illinois showing 2014 type yields while other areas in IL and IN are struggling with lighter test weights and disease issues. According to Brazilian analyst Safras, their estimating the 16/17 Brazil corn crop at 92.3 mln tons vs 70.75 for 15/16 on a bump in planted acres thanks to higher interior prices and the anticipation of more cooperative weather. Funds today were estimated buyers of 8,500 contracts of corn.  On the charts, today’s action helped to turn stochastics for higher and sets up the prospect for the first ‘higher low’ since June. Key now will be the market’s ability to close above Monday’s high of 3.43 ¼. Doing so would leave the short fund position cornered with an under-water position and searching for sellers to let them out.

 

Soybeans led the strength in the grains market today on bargain buying, tight supplies ahead of widespread harvest and widespread deluge rains in the western bean belt with areas in SD, MN, NE, IA, MO and KS receiving more than eight inches of rain over the last two weeks. The wet Midwest pattern is expected to persist in many areas for the next few weeks, interrupting harvest progress. Production areas in North and South Carolina have also been inundated by recent tropical storm rains. While soybean futures were higher, the crush margin continues to be soft and weakened again today on soybean’s strength. Funds were estimated buyers today of 8,000 contracts of corn. CFTC data showed that as of Tuesday, Managed Money had lightened their net short position by 39k contracts – taking them to a net short of -158,165 contracts. Much of this done on the rally into Monday’s USDA report.

 

Wheat was supported by the short fund position but strength was limited by export concerns off Egypt not receiving offers for its most recent tender.  Wheat exporters are struggling in competition with Russian supplies but the bright spot is the current pace for the US on exports is the second best in the last five years.

 

Cattle were higher on better cash trade this week and strong packer margins. Plains reports of cash trade at $110, up $5 from a week ago. Participants are looking ahead in hope of seasonal demand to begin picking up in late September.  

 

Hogs closed higher, albeit reluctantly on its discount to the lean index and the oversold condition of the chart. Friday morning’s wholesale pork price was 86 cents per cwt higher than Thursday. Manitoba, a large piglet exporter to the US, confirmed its first case in three months of PEDv.

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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