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Closing Comments

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Closing Comments

Corn

Corn quiet and uneventful after three strong days.

Mid-day report from the floor have funds buying 3,000 contracts. Cash market reports have active farmer selling on the rally. Action indicates we could be looking for a sideways chop as we work through the next three full days of trade prior to Tuesday’s USDA report.

Trade guesses for next Tuesday’s Planting Intentions report show an average trade expectation of 88.731 million acres with a range of 87.00 to 89.70 million – down from 90.6 million in 2014.

Quarterly Stocks trade estimates for Corn come in at 7.609 billion bushels – the largest since the March report in 2010. Trade estimate range from 7.459 to 7.800.

Bull spreads continued today (strongest since Feb 20) with May corn up 1 ¾ at 3.95 and Dec only up ½ at 4.18. December corn has been able to check off its second close in a row above the 200 day moving average and just above a long term trendline. A small setback or consolidation in the value area between 4.10 and 4.20 wouldn’t be surprising. Clearing the Feb highs of 4.21 should clear the way for a move into the 4.30-4.40 area.

Soybeans

Soybeans set back from recent bounce on slow news and continued large acreage expectation for 2015.

Gulf soybean values firm on loading of Chinese boats and slow bean movement to the gulf from slow farmer selling and high water levels. Below average rains are seen for Argentina and northern Brazil, average to above average rains for southern Brazil with temps below average in most of South America.

Trade guesses for next Tuesday’s Planting Intentions report show an average trade expectation of 85.949 million acres with a range of 83.10 to 88.00 million – up from 83.7 million in 2014.

Quarterly Stocks trade estimates for Soybeans come in at 1.346 billion bushels – the most since March 1, 2012. Trade estimate range from 1.273 to 1.404.

May soybeans closed down 3 cents while new crop lost some ground in the spread closing off 5 ¼ at 9.57 ¼. The November beans have resisted for three days in a row at the 20 day moving average. If highs from the last couple days can be taken out, we should be able to see a move up to the 9.80 area.

Wheat

Wheat continues its setback on friendly Russian weather.

Trade guesses for next Tuesday’s Planting Intentions report show an average trade expectation of 55.796 million acres for all wheat with a range of 54.95 to 56.80 million – down from 56.822 million in 2014.

Spring wheat acreage in 2014 was 13.025 million with the trade expecting intentions for 2015 to be 13.334 million acres.

Quarterly Stocks trade estimates for Wheat come in at 1.14 billion bushels – up 7.9 percent from the previous year. Trade estimate range from 1.083 to 1.200.

Chicago July closed off 4 ½ cents, KC July off 4 ¾ while Minneapolis was able to hold relative strength with September only down 1 ¾. July Chicago should look to find support just below its current price of 5.23 ¾ in the 5.12 to 5.14 area.

Beef

Live cattle futures finish mildly lower as the market awaits cash trade.

After strong gains to start the week, the beef complex appears to me marking some time as cash trade awaits. Asking prices are mostly around $166 live in the South and $168-$169 live in Nebraska, while lots in Iowa are pricing cattle $5-$7 over April futures. The mid-day gains in beef prices are encouraging strength in asking prices as choice was up 3.55 at 250.38 and select was up 2.79 at 247.57 with 100 loads trading.

Slaughter numbers remain low, but we are still seeing product demand rise as retailers stock up for the anticipated barbecue season. Charts have a supportive tilt to them as well, which has bolstered buying on setbacks. To see significant direction from here this week, this market will likely need a catalyst from cash trade.

Feeder cattle futures followed along with the live cattle, aside from the front-month March contract which finished slightly higher at 217.80 and goes off the board tomorrow. The most recent feeder cattle index was 216.23 per cwt, up $3.21 over the past week. Slight gains in the corn market also kept pressure on deferred contracts, but like the live cattle, the feeder charts are positive, and could see buying on breaks for now.

Pork

Lean hogs see a mixed trade as nearby contracts find support, while deferreds continue to struggle with sluggish cash and pork.

After yesterday’s respectable closing action, the lean hog market appeared to “check out” lower prices from yesterday, and again held. The market is still digesting cold storage data as the Hog and Pig Report looms on Friday. Short-covering could still be a theme as traders take a “risk-off” mentality ahead of those figures.

Mid-day carcasses were up .05 at 67.94 with 187.58 loads trading, while bellies were down .74 at 70.08. Cash hog bids were steady to .50 lower as the market bides its time until the end of the week, and it appears as though packers are done for now.

The latest CME 2-day lean hog index stands at $62.29 after being beat up over the last couple of weeks. Weights are still heavy and buyers appear to be “hand-to-mouth” for now until more is known about second quarter supplies.

Today’s kill is estimated at 435,000 heads, down 1,000 from the previous week, but up 25,000 from the previous year. Week-to-date slaughter is estimated at 1,301,000 head, up 13,000 from the previous week and up 61,000 from the same period last year.

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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