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Closing Comments

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Closing Comments

Equities have been able to recover this week’s losses to finish the week, but the bigger story has been in the energy market. March Crude has been able to gain $1.68 on the week, the best week since December, but more significantly is the gain of more than $4.50 off the lows of the week as the market runs out of sellers.

Corn

Corn closes March 7 cents higher for the week on short covering.

Corn was able to close higher today and up 7 for the week in the March contract on some global supply concerns, short covering and better than expected export data at 45.8 mln bu for the week ending Jan 14th.

Brazil’s rush to export corn may have created some internal supply problems, especially for their poultry producers. With Brazil exporting over 11 mln tonnes of corn in the last two months of 2015, cash corn prices have skyrocketed at the interior of Brazil on the anticipation of domestic shortages. With another record amount of corn scheduled to be shipped in January, the livestock farmer’s scramble for ownership could have global market implications.

CFTC data showed that Managed Money has reduced its net short position by 28,621 contracts as of the end of trade on Tuesday, but that still leaves them with a huge short position of more than -158k contracts and non-commercial speculator’s net short position of more than -203k.

March corn stopped the week right at trendline resistance. Stochastics are overbought and could have the market set for some consolidation. Longer term upside for March corn at 3.80 and 3.95.

Soybeans

Soybeans close lower on cooperative South American weather.

Soybean futures closed lower after a stronger start to the day on forecasts for rain in key growing areas of Brazil and Argentina.

USDA export sales for the week ending January 14th had soybeans at 36.2 mln bu, close to trade expectations. This puts sales to date for the year at 1,475 mln bu of soybean, off 9 percent from last year.

Soy oil futures firmed with crude oil and soy meal lower with the unwinding of long meal / short soyoil spreads.

The March soybean contract closed 2 ½ lower for the week continuing the seventh day of range-bound trade. Next week’s support in March is at 8.55 and resistance at 8.90-9.00.

Wheat

Wheat ends mixed on large global supplies and lacking headlines.

Cold weather forecasts in Russia and Ukraine could offer support in upcoming days on weather concerns, but snow cover will likely limit the extent of damage.

Dry weather continues in India and North Africa, but aren’t headline stories that are providing support in the face of ample global supplies and good conditions in much of the US and Europe.

CFTC data showed very little change in the speculative position – Managed Money is currently short over -70k contracts.

Livestock

Cattle close higher on anticipation of the COF report with hogs finishing mixed.

Cattle on Feed report (below) came in close to estimates, although more were placed than expected. Cold Storage report had total pork supplies lower at 545 mln lbs vs November at 560 mln while frozen beef grew to 513 mln lbs vs November at 510 mln. This is the largest frozen beef supply since 2012.

Boxed beef cutout values were lower on light demand and moderate offerings. Choice rib cuts lower while select steady.

Argentina’s Ag Minister confirmed that the EU will lift its restrictions on animal product exports from Argentina within the first half of this year.

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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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