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Closing Comments

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Closing Comments

The Labor Department said the US economy added the fewest number of jobs in seven months in April and more than expected dropped out of the labor force leaving economists expecting only one interest rate hike for 2016.

Brazil Senate impeachment committee on Friday voted 15 to 5 to recommend trial by Senate for the President, the full body will take up the recommendation on Wednesday.

US drillers cut rigs for a seventh week in a row to the lowest level since October of 2009 according to Baker Hughes Inc.

Corn closes higher on bargain buying. Strength continues to be moderated though off the anticipation for USDA’s reminder coming Tuesday in the supply and demand report of ample carry out supplies and from the continued planting progress in corn – albeit soon to be abbreviated as showers return to the Midwest. On the demand side, the USDA reported a private sale of 132,000 tonnes of corn for delivery to Israel for the 15/16 marketing year.

CFTC data showed Managed Money reduced their net long position by -8,747 contracts leaving them with a net long position of 71,032 in combined options and futures.

Technically July corn was able to hold above the 50 day moving average and trendline support. Expect corn to continue to watch planting progress, Brazil crop stress for second crop corn and the numbers that will be released in the Brazil and USDA monthly supply and demand numbers next Tuesday.

Soybeans recovered much of yesterday’s losses on continued expectations that the lower yield and lower quality of crop from Argentina will turn into better demand for US supplies. This yielded the fourth weekly gain for soybeans. Informa FNP estimates 16 to 17 percent of the 16/17 soybean crop which will be planted in September is forward sold compared to just 4.7 percent of the previous crop at this time last year.

Funds were reportedly buyers of 11,000 contracts of soybeans today. CFTC data for the week ending May 3rd showed Managed Money added an additional 7,430 contract to their net long position.

Soybeans closed on their highs as buying flooded back into the market in the final 10 minutes of trade.

Wheat gains were limited to finish the week on ample supplies and slow export demand for US wheat. Stats Canada noted that Canadian wheat stockpiles have fallen to the lowest level in three years following a smaller harvest and good winter exports.

CFTC data showed Managed Money added -1,437 contracts to their net short CBOT wheat position for the week ending this past Tuesday and added -4,809 in KC.

Bearish information continues to come into the wheat market but directional selling momentum is hard to find as the market consolidates in a value price area. Seasonally May brings rallies and June brings lows in the winter wheats.

Cattle climb for the 6th straight session helped by optimism for cash prices to offset stagnant wholesale beef demand. Kansas cash cattle ended the week at $128, up $2 from last week. Choice beef was down 76 cents from Thursday and select dropped 59 cents – more than $8 lower than the previous week. The expectation is for the beef demand to improve as the Memorial Day holiday approaches May 30th.  Look for upside resistance in the June futures contract in the 122-125 area next week.

Hogs were lower off profit-taking and the huge drop in wholesale pork values. Pork belly prices have weighed on the wholesale pork prices on ample supply prior to BLT season. June hog futures have closed above their 50 day moving average for the seventh day and were able to hold on today’s weakness. Technically look for this area to be support in the June contract with the upside target still being recent high at 84, with targets beyond at 86 and 88.

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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