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Closing Comments

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Closing Comments

Corn

Corn found some strength today but prefers to follow soybeans rather than lead.

Weekly corn exports came in at the low end of trade expectations with 14/15 at 28.2 million bushels and 15/16 at 5.8 million. Japan, Colombia and Mexico were the best buyers.

By mid-session funds had been buyers of 6,000 contracts of corn. The strength held up through the day but was not able to build into the close.

Safrinha corn planting progress continues to encounter delays. Similar previous years suggest a potential reduction of 160 to 200 million bushels from the region.

USDA will soon begin the US farmer survey for 2015 planting intentions. Much of the trade is looking for slightly lower corn acres and higher soy acres versus last year. There is also an anticipation in the trade that corn, wheat and soy stocks could be higher than expectations.

New crop corn again shows more strength, closing back above the 20 day moving average while old crop has not yet been able to breach the 20 day.

Soybeans

Soybeans, especially old crop, resume strength on continued trucker strike concerns.

Soybeans also came in on the lower end of the expected export range with 16.9 million bushels for 14/15 and 1.3 million for 15/16.

Some Brazilian truckers have agreed to end the nine-day strike which has disrupted the supply flow throughout the country. The government said it would extend a year of free financing for vehicles, keep diesel prices unchanged for six months and help develop a freight rate framework. The agreement seems to be with the organized truckers while the independent truckers continue to maintain roadblocks with some violent confrontations though.

Short term forecast has a less wet NE Argentina and Northern Brazil and a slightly wetter central Argentina. Nearby soy and soymeal premiums are sliding in Brazil.

With a solid close, most all soy contracts were able to take out yesterday’s high and posting a new high close since the January USDA report. The market is at risk of bearish news out of SA and plentiful supplies coming to the market as fundamentals are not bullish, however for now the chart continues its orderly march higher into congestion.

Wheat

Chicago gets its first higher close in seven sessions.

Wheat started the day stubbornly lower but managed to begin to “somewhat” participate in today’s strength in grains. Too much supply, snow cover and lack of significant threatening weather continues to weigh on wheat.

First notice day in March futures tomorrow. The price action on the chart suggests that it is possible that wheat has attained the downside price targets it needs to, however there is little to get the bulls excited for right now and it may only be a reluctant participant if the rest of the grain complex works higher.

Beef

Discount to cash continues to support the beef complex.

With low open interest currently in the market and the steep discount of futures to cash – the belief in the market that a short term low is in place continues to persist.

April live cattle bounced into the 20 day moving average and found resistance at the moving averages as it had last week. If we can find follow through strength tomorrow, the bears may well be content sitting on the sidelines for now after the market has been able to find some support here.

Pork

Hogs reverse yesterday’s gains but deferred contracts are reluctant to give too much.

Hogs consolidate recent gains as slaughter and production numbers come in above expectations. It sounds that packers may beginning to draw the line at higher prices. Packers look to be backing away if they can. The pork cutout was down $1.58 mid-day as bellies continue to collapse. Sources indicate that the feel is that there is product everywhere.

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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