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Closing Comments

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Closing Comments

 

Corn was able to gain 5 cents for the week, finishing + ¾ (Mar). Strong growth in cattle and hog numbers were reported today, helping the feed outlook. The South American weather maps look favorable as of today, and will be getting a lot more scrutiny moving forward. The Commitment of Traders report will be released later today, and it is expected to show managed funds net short around 235K contracts combined of corn futures and options. The CBOT will re-open at 8:30am on Tuesday.

 

Soybeans provided uninspired trade on January option expiration day, + ¾ (Jan). The largest open interest strikes at 9.90 and 10.00 were well out of range and did not have much impact. The silver lining after making a new low in the overnight, was a positive close, as soybeans had been down 11 of 12 sessions coming into today. Both Brazil and Argentina have rain in the forecast and U.S. exports are down, providing pressure to price. In exports, the USDA reported a private sale of 252K MT of soybeans to China. Technical indicators are showing oversold, which could help support if the market is to reverse course.  

 

Wheat posted a correction heading into the holiday. Minneapolis spring led with the largest setback, -5 (Mar). The winter wheats finished -2 ¼ (Chicago) and -2 (KC). The Drought Monitor is showing dryness building across the Central Plains and the South. Those conditions are not likely to improve this winter due to La Nina. January 3rd will feature a monthly condition report for wheat that is expected to show poor growing conditions for the hard wheat variety. Frigid conditions over the holidays with little snow cover could result in a measure of winterkill.

 

Live Cattle reacted to a bearish Cattle on Feed report, -1.100 (Feb). To summarize, On Feed was significantly higher at 108.1% and the highest since 2011; November Placements were much larger than expected at 113.9%, and the highest since 2007; November Marketings were slightly higher than expected but a record high for November at 103.2%. The Cold Storage report showed total lbs of frozen beef down 4% from last month and down 8% from last year.

 

Hogs reacted to a slightly bearish report with a bullish flair, +1.400 (Feb). The Hogs & Pigs quarterly report showed the following results: U.S. inventory of all hogs and pigs up 2% over last year but down slightly from September at 73.2 million head; Breeding inventory up 1% from last year and up 1% from last report at 6.18 million head; market hog inventory up 2% from last year but down slightly from September at 67.1 million head. In Cold Storage, stocks of frozen pork were down 16% from last month and down 3% from last year. Pork belly stocks saw an increase of 12% from last month and up 94% from last year.

 

Merry Christmas to you and your family!

 

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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