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Closing Comments

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Closing Comments

Corn

Quiet day in the corn market but

Exporters shipped 28.5 million bushels of corn in the week ending February 12, up from 27.6 million the previous week and up from the five-year average for the week of 26.4 million bushels. Marketing year shipments total 645 million bushels, up 10 million or 2% from the previous year. Exporters typically ship 40% of final shipments by this point in the year, whereas they had shipped just 32% by this point last year. This year they have shipped 36% of USDA’s target as they focus on shipping soybeans ahead of the South American export season.

Exporters shipped 10.7 million bushels of grain sorghum in the week ending February 12, up from 4.5 million the previous year, also up from the five-year average for the week of 1.4 million bushels.

Corn futures stayed relatively quiet most of the day.  Technical action starting to look a bit more friendly, closing above a trend line of the most recent swing high.  Resistance at the 3.95 area for march corn is up next, while 3.80 looks to support.

Delayed soy harvesting is preventing farmers in Mato Grosso from planting corn; only 23.3

percent of the state’s corn crop has been planted, down sharply from 45.9 percent a year ago.  This may aid in a little more strength in the short term for corn.

Soybeans

Strong crush numbers today and triggered buy stops helped the rally today.

Exporters shipped 49.6 million bushels of soybeans in the week ending February 12, down from 54.6 million the previous week, and up from the five-year average for the week of 42.8 million bushels.

Marketing year shipments to all destinations total 1.480 billion bushels of soybeans, up 210 million or 17% from the previous year. Exporters typically ship 64% of final soybean shipments by this point in the marketing year that ends August 31, whereas they had shipped 75% by this point last year. However, this year they have already shipped 82% of USDA’s target for the year.

The National Oilseed Processors Association reports that its members crushed 162.675 million bushels of soybeans in January, essentially matching the record monthly pace set one year earlier. The trade had been anticipating crush of 162.7 million bushels. 

 

The .15 cent gain in soybeans today raised the new-crop soybean/corn price ratio to 2.36 to 1 as corn and beans try and compete for acres.

Wheat

A few weather concerns and the Ukraine situation got things started in the right direction for wheat, but….

Exporters shipped 14.8 million bushels of wheat in the week ending February 12, up just slightly from 14.6 million the previous week and down from the five-year average for the week of 20.9 million bushels.

Marketing year shipments to all destinations total 586 million bushels, down 253 million or 30% from the previous year. Exporters typically ship 67% of final wheat shipments by this point in the marketing year, whereas they had shipped 70% by this point last year. This year they have shipped just 65% of USDA’s target.

Wheat started off this morning .13 to .16 cents per bushel higher due to cold weather concerns in the wheat belt and another failed ceasefire in the Ukraine.  The Holiday weekend provided some anxiety on the open, but wheat quickly reversed on the fact that world supplies are currently more than enough to meet demand needs.

Beef

West Coast port strikes, and lower prices for competing meats abroad provide headwinds for the beef complex.

The opening was higher this morning for the beef sector on the heels of strong closes Friday, and continued expectations of cold air plunging into the Midwest and Plains this week. The tide changed mid-morning as the West Coast port strikes are cause for concern. In addition to that, Canada announced another case of BSE, which led to South Korea’s ban on Canadian beef – not that they buy much anyways – but the sentiment is a “risk-off” vibe. The avian bird flu cases on the West Coast aren’t helping the cause as many suggest a high risk that other countries, in addition to China could ban U.S. poultry, creating a domestic discount for prices across the board, and pressuring beef and pork. With expectations that poultry supplies will remain ample, and continue to grow into Spring and Summer of 2015, these headlines add fuel to the fire.

A blast of cold air will hit the Midwest over the next 48 hours, which had caused concern late last week for the beef markets, but that headline has been lost in the mix today. A warmer trend into March may also be playing a factor.

Beef prices saw gains today with choice up $2.00 at mid-day and select up $1.01, but with only 56 loads trading, it wasn’t enough to propel futures. Asking prices remain around $164 in the South, but cash trade is non-existent, and will likely remain that way until late this week, or until more is known about this cold weather. Packers may flinch if things are worse than expected as supplies are still relatively tight. Weakness in the pork complex isn’t helping the producer, and neither are the packers’ margins.

Feeder cattle futures are succumbing to the same headlines, and threatened to take out Friday’s lows. A breach could trigger some technical selling. The choppiness in corn isn’t providing much direction. Attention will be paid to cash trade as the most recent feeder index is above $211.  

IF the port strike situation is behind us, the focus will quickly shift to Friday’s Cattle-on-Feed Reports, and the big discount futures hold to the cash markets. Some suggest placements down as much as 15% for January.

Pork

West Coast port strike continues to weigh on hog futures, and cash and pork prices continue to disappoint.

The futures’ premium added towards the end of last week waned today as the shutdown continues, and the Obama administration gets involved. Fundamentals aren’t providing much optimism, so a shift in this issue may be the only factor that can pull futures higher in the short-term.

April futures are threatening to trade into new lows late in the session as the cutout and cash find no support. The most recent cash index remains at 63.91, with April futures near $64.00.

Even deferred contracts are feeling the pressure as June and July contracts were also seeing triple-digit losses. Mid-day carcass prices were down .40 at 71.98 and bellies were down 3.51 at 80.39.

Until the back-log of product can move, the charts will likely continue their drift lower. A resolution to the port strike would help the entire meat complex

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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Aaron Hodge | Market Associate
WATER STREET ADVISORY® | www.waterstreet.org

(309) 680-1200 | ahodge@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.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.

 

 

https://www.waterstreet.org/s/ws-80x70.png

Aaron Hodge | Market Associate
WATER STREET ADVISORY® | www.waterstreet.org
(309) 680-1200 | ahodge@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.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.