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Closing Comments

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Closing Comments

EIA inventory report was bearish again with builds in crude oil inventories and gasoline, but a draw-down in distillates. Demand was up from last week’s unseasonably low levels – but still off from last year this week.

Despite the bearish inventory report, the energy complex traded higher most all of today’s session in an effort to come out of its oversold condition. February heating oil (diesel) is currently trading near 90 cents.

A report from the International Grains Council said global grain stocks at the end of the 15/16 season could reach their highest level in 29 years due to favorable harvest prospects. They raised their forecast by 1 mln tonnes from the previous year of 455 mln. However, consumption is placed at the second highest ever – underpinned by strong demand for food, feed and industrial use.

Export sales will be released tomorrow (unless the snowstorm shuts down the government).

Corn

Corn ends lower on profit taking and increase in offerings from US farmers.

Corn closed lower for the first time in seven sessions today on an increase in farmer selling and profit taking on the best price rally since September.

Weekly EIA ethanol data featured a dip in production and an increase in stocks. Production slipped -2 percent. Blender demand was better than expected, jumping 6 percent this week.

Sources are suggesting the troubled Spanish biofuel producer Abengoa will be selling their entire bioenergy division for $1 billion, including their US corn ethanol assets.

Argentina’s government raised its corn planting forecast for the 15/16 crop to 5.69 mln HA from an earlier estimate of 5.40.

Today’s high of 3.72 March will provide upside resistance to the market for now with 3.80 resistance above that level.

Soybeans

Soybeans higher on fund buying and firming meal values.

Light news in the soybean market today. Buenos Aires Exchange estimating production at 58.0 mln mt vs the USDA at 61 mln mt and last year’s crop at 57 mln mt.

On the charts, 8.88-8.91 resistance for the March contract for now with 9.00-9.10 target above that as the market continues multi-month, choppy trade.

Wheat

Wheat higher on fund short covering and technical buying.

The fundamentals continue bearish with the IGC increasing global wheat production by 5 mln tonnes, but the large short fund position continues to provide support to the market as farmers are reluctant to sell at these levels.

Buenos Aires Grain Exchange upped their 15/16 Argentine wheat harvest forecast by 200,000 mt to 10.3 mln mt.

Livestock

Cattle higher on technical buying and improved cash price expectations.

Boxed beef cutout values lower on select and sharply lower on choice on light to moderate demand and offerings.

Cash hogs around the Midwest traded mostly 50 cents to $1 per cwt higher fueled by strong wholesale pork demand. Wednesday’s wholesale pork price rose 92 cents per cwt to $74.35.

Closing Market Snapshot

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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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