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Closing Comments

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Closing Comments

The markets were wild today with major mid-session reversals from the lows on Soybeans, Soymeal, and Crude Oil.

While Corn did not have the same recovery that soybeans were able to achieve, it did manage to close nearly .06 off its session lows. A growing planting window for the Eastern corn belt and Plains was the primary bearish force in trade today, and was amplified by the weakening crude market and the strength of the dollar. Corn export sales exceeded trade expectations at 2.3 mmt against the high end of the range at 1.6 mmt. The situation in Brazil continues to develop, as a short safrinha corn crop could lead to the smallest Brazilian carry-out since the 2006-07 crop year.

Soybeans managed a miraculous recovery from lows today, trading back from -.24 at 11 a.m. to close at -.04 on the day. This recovery was largely spurred on by soybean meal which surged to new highs for the current move. Meal’s strength in turn fueled crush margins to new 18 month highs which continues to support high levels of domestic bean consumption. Bean export sales were not as strong as corn but did come in toward the high end of expectations at 714k mt, with meal slightly disappointing at 165k mt.

Unsurprisingly, Wheat was exceptionally weak in today’s trade, though much like corn it could not close on its lows. Threats of a two-tiered approach to KC wheat – one that has sufficient protein quality, and one that is low-protein feed quality – continues to pressure the market and keep it from achieving any kind of sizable recovery. High yield reports are also pressuring the market, as anecdotal 100 bpa wheat yields due to late rains are not enticing buyers to the market. Wheat exports were slightly over expectations at 750k mt.

Cattle recovered nicely into the close after early session weakness. Feeders were weaker, but also had the more impressive recovery. Trade seems to be primarily focusing on Friday’s cattle on feed report, with placements higher or lower being hotly debated. Expectations have been generally been for lower placements and higher marketings, but there are several factors that could explain placements higher than expectations: a larger supply of feeder cattle, improved feeding conditions, and a higher marketing rate of fed cattle.

Hogs got caught up with the general commodity sell-off with deferred contracts closing weakest. The lean index continued to strengthen to $77.13 into new highs.

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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