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Closing Comments

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Closing Comments

Corn

US Dollar rallies on ECB Quantitative Easing, pressuring commodities.

Wheat continues to lead the market mindset – higher yesterday, lower today with cold temperatures not delivering on their promise. The strength in the dollar is adding to the pressure in the commodity markets as the ECB announced additional quantitative easing triggering fluctuations in global currencies and bonds while weighing on the commodity sector. June crude down over $2.00 and gold down more than $20.

Monday’s USDA planting progress showed corn at 85% compared to an average of 75%. Department of Agriculture of Illinois Monday conditions report rated Illinois corn 82% good/excellent vs 62% a year ago on this date.

Weekly export shipments for the week ending May 14th totaled a healthy 43.6 million bushels.

Technically today’s break in corn gives it a 61.8% retracement of the five day rally from May 12th. Corn should hold this area if it can extend on its recent gains.

Soybeans

November soybeans close its contract low from September on global supplies and stronger dollar.

Soybeans got some demand news this morning with 132,000 MT of old crop going to China. CIF Gulf values firmed a bit in the front months and processors in the East are still paying up.

Planting progress yesterday came in at 45% vs the average for the week of 36%. Conditions remain favorable in general despite some regional replantings.

Export shipments for soybeans was a healthy 12.5 million bushels for the week ending May 14th.

July soybeans, while weak, were able to hold support well on lack of weakness in the meal futures. Nearby board crush margins have rallied 10 cents in the last four sessions, putting crush margin close to .85 which is at the top end of this contract trading range.

July soybeans are holding lower Bollinger Band support and Stochastics are moving into over-sold territory but indicators remain quite bearish.

Wheat

Kansas City lead the trip higher and today leads the pull-back lower.

The cold weather disappoints and the fundamental outlook remains bearish with growing global stocks while the market keeps an eye on plains harvest weather and potential developing El Nino Australian story that won’t likely have a market impact for a couple more months.

Potential moisture stress could develop in Southern Russia and parts of Ukraine if forecast for the next 10 days doesn’t change. Production in India continues to be cut with estimates close to 85-90 MMT compared to 95-100 just a couple months ago.

Early spring wheat conditions are reported to be very healthy at 65% good/excellent with only 4% listed in poor/very poor.

Despite winter kill and striped rust talk, yesterday’s crop progress report had winter wheat conditions up 1% to 45% good/excellent which was in line with expectations.

Export shipments continue to have wheat struggling to compete. Week ending May 14th shows 11.4 million bushels for export.

Technically today’s break keeps July Chicago and KC above the 50 day moving average for the fourth close in a row.

Beef

New record high for choice cutout and strong beef values hold up prices.

Indications show that packers may be willing to pay steady for cattle this week. The sharp rally in beef values could make feedlots more resistant to taking lower money. Kansas bid of $157 posted while asking prices remain $163-164 live in all regions.

While the market watches for potential larger long term feeder supply, cattle prices and cheaper corn provided support in feeders today.

Live cattle continue to hold above many moving averages including the 50 day and 20 day but parabolic sell stops are narrowing in under the market at 149.50 in June.

Pork

Packers are full for this week but supplies remain tight.

Bids are steady to as much as $1.00 lower today. Calls are for bids to be steady/lower tomorrow. The pork cutout is up $1.82 at noon. Bellies 81.32 +0.22.

Price is currently in the middle of the relatively wide daily range at unchanged. The June contract is holding above the 20 day moving average and seems to be in indecision mode today.

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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