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Closing Comments

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Closing Comments

 

Corn continued to test the resolve of market participants, forging another low, -1 ¾ (Dec). USDA weekly export sales showed corn at about half of last week’s level, with an announced 950K MT vs. estimates of 1.25-1.7 MMT. Japan was the largest customer with South American destinations making up the majority of the rest. NAFTA negotiations are vitally important, and unfortunately appear to been strung out, with the next round called off to give participants more time to consider how to move forward after a testy Round 4 in the U.S. Mexico is the largest importer of U.S. corn, and they have been shopping South America, looking for ways to lessen their dependency on the U.S.

 

Soybeans capitulated to bearish sentiments and a lack of fresh news, -4 ¼ (Jan). There were no new export sales announcements this morning. On the weekly USDA export sales log, soybeans were within expectations, however they were reduced expectations. Sales came in at 1.176 MMT, within the estimated range of 1.00-1.60 MMT. Exports need to pick up significantly to avoid a downgrade by the USDA on the balance sheets later in the year. Providing some support was a surprisingly bullish NOPA crush report yesterday, but soybean oil was down today.

 

Wheat futures traded sideways in mixed trade. The net short position continues to grow, and may put traders in a vulnerable position at some point – but, we have not found that point yet. Russia garnered a large booking to Egypt of 240K MT of wheat yesterday at tender. Russia continues to leverage their improving logistics and bountiful crops to outmaneuver the competition for global business. They have been able to keep their pricing at a low level, out of reach of the U.S. USDA weekly wheat exports were pegged within the range of estimates, 489,300 MT vs. 300K-600K MT. Wheat sales in the crop year-to-date are down 5% from last year. Chicago SRW +1 ½, Kansas City HRW – ¾ and Minneapolis HRS +5.

 

Live Cattle gave back yesterday’s gains, -.650 (Dec). Look for Cattle on Feed report results tomorrow, which will include reporting on all U.S. feedlots with 1,000 head or more capacity that are on “full feed for slaughter.” Average industry estimates are for placements to increase 7.1% over last year. October is an important month, because it is the largest month regarding cattle placed into feedlots. Marketings are expected to be up 0.6% over last year, while On Feed up 5.7%.

 

Hogs showed a recovery bounce yesterday after 10 consecutive sessions in the red, but resumed their downward trek, -1.025 (Dec). The CME Lean Hog Index has been at a premium to futures, but may have a hard time maintaining its strong cash market position, as USDA pork cut-out values and hams are down sharply the last few days. Hog weights are up for the third week in a row. If cash can stabilize, it is likely futures will rally to come into parity by contract expiration in mid-December.

 

Closing Market Snapshot  

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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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