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Closing Comments

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Closing Comments

Crude oil and the product were lower to start the week on expectation of continued build in crude supplies this week while grains were lower on anticipation of tomorrow’s USDA monthly supply and demand report.

Corn lower on trade fears ahead of tomorrow’s monthly USDA report and technical selling. Export inspections came in for the 6th week straight above 40 mln bushels at 44.980 mln bu. Analysts are expecting tomorrow’s USDA 16/17 corn ending stocks to come in at 2.3 bln bu compared to the expected ending stocks for 15/16 of 1.84 bln – if realized this would be the largest number since 87/88. The trade is expecting a drop in Brazilian production for 15/16 to 80.5 mln mt vs the April guess at 84.0 mln. In a poll of trade participants, this afternoon’s corn planting progress is expected at 62% complete compared to the five year average near 50%.

Below is a comparison of port prices of corn at US Gulf (orange), Brazil Paranagua (green) and Argentina river. –Thomson Reuters.

Soybeans lower, but off the daily lows after starting the day back at the top of the trading range on news that China will start selling soybeans out of their reserves at 100,000 per week through the end of 2016. Export inspections showed a continuation of the typical seasonal slow pace with only 4.09 mln bu of soybeans. Analysts expect tomorrow’s USDA 16/17 ending stocks to come in at 405 mln compared to the expectation for the 15/16 ending stocks at 425 mln (down from the April report of 445 mln).

Wheat export inspections came in at a 32 week high 18.266 mln bu. but that wasn’t enough news to distract from the bearish fundamentals – sending the winter wheats leading the price lower today. For tomorrow the trade is expecting 2016 US winter wheat output at 1.38 bln bu compared to 1.37 bln last year. Analysts expect 16/17 world wheat ending stocks at 242.9 mln mt vs the expectation of the 15/16 ending stocks of 239.77 mln.

Cattle came out of the chute this morning with their tail on fire higher on the heels of cash cattle finishing last week around $4 higher than the previous week – indicating packer’s urgency for ownership. Tyson Foods CEO noted on a conference call a “good cattle supply around us, looks like that will continue through the rest of the summer. The weekly cattle chart leaves an ‘island bottom’ bar from last week as there is a gap to it and a gap from it – if this morning’s gap remains unfilled – look for continued technical strength.

Hog futures lower on technical selling on lower wholesale prices. Cash hogs traded steady with last week supported by good packer demand and slaughter rates. Ample supplies and declines in wholesale pork from the unseasonably cool weather slowing grilling weighed on price throughout the session. Last week 2.214 mln hogs were processed in the US, up from 2.111 mln the same week a year ago.  

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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