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Closing Comments

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Closing Comments

Corn struggle with the USDA increased production estimate, shedding 8 ½ cents in the December contract this week.  Brazil reported planting 71% complete, and Argentina came in 39.8%.  The Buenos Aires exchange estimates corn acres planted will be up 27% over last year.  Financial media reports circulating are that President Elect Trump is looking to Iowa’s Governor and the state’s Ag Secretary to lead his Ag Advisory Committee. On the charts, December posted a new 20 session low but is holding trendline support. Dec closed at 3.40 ¼ and should find technical support in the 3.37-3.40 area.  

 

Soybeans lost 4 ¾ in the Jan contract this week on a wide range trading week. Another heavy volume session overnight saw soybeans +20, following notable gains in palm oil futures but ran out of steam early morning and finished -12 on the day in Jan.  The stronger US dollar and higher Brazilian real this week has added incentive to the Brazilian farmers to sell, which will compete directly with U.S. sales.  Planting is estimated by Brazil at 29% complete, and Argentina 10.9% complete. January managed to close up and off from session lows but did close below the 200 day moving average. Jan needs to hold above the 9.80 area or threaten a return to the bottom of the trading range toward 9.50.

 

Wheat actually gained across the complex today, let by the December Minneapolis up 5. In exports, attention focused on Egypt, as they announced their second tender this week (60K mt), which ended up going to Russia.  The U.S. had an offer on Tuesday for 240TMT that was only $10/mt out from doing business.  With Russian wheat trading up, look for future U.S. offers to be even closer.  If the U.S. could compete in this space (Egypt is world’s largest importer), it could be a real game changer. Domestically the market continues to monitor conditions in the Plains as the HRW approaches dormancy.

 

Cattle and feeders finished today on their session highs. December cattle gained 2.875 on the week.  In cash cattle, packers attempted to woo sellers at $103, but were unsuccessful as prices are being nudged higher by increased optimism on the part of sellers.  Packers in northern areas are padding their inventories with the threat of a winter storm next week.  Beef exports have been strong all year, however there is some concern as to the potential negative impact higher interest rates coupled with a rising dollar could have moving forward.

 

Hogs, after starting the day positive, ended up finishing the day lower. Hogs having been boosted by follow-through buying and Thursday’s firmer cash and wholesale pork values.  The hope is for strong retail ham buying through the holiday season.  Investors have been more optimistic as of late, with overall improving cash and wholesale prices in spite of over-abundant supplies.  According to the USDA, 76,000 more hogs were processed from Monday to Thursday than the same period last year.

 

Thank you to all veterans and their families for your service to our country and for protecting the freedoms we enjoy today!

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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