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Closing Comments

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Closing Comments

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Corn had an indecisive trading day before closing a quarter of a cent higher. Corn continued the pattern of this week with lower most of the session, rally midday, before an unspectacular close near unchanged. Argentina continues to inch toward completion of their planting with the Buenos Aires Grain Exchange showing planting progress at 90.7% complete, up 8% on the week. Bird flu continues to break in Taiwan, where overnight the fourth confirmed case was found resulting in the culling of over 17k birds. It is discouraging to see corn unable to sustain strength as beans pull away in value, but for now tight range seems to indicate that buyers and sellers are satisfied with corn prices where they are.

 

Soybeans followed through yesterday’s explosive action with more short-covering and fund buying to close 6 cents higher on the day. Next week’s CFTC release will give more detail, but pre-report managed money had amassed shorts to the tune of 114k contracts; the explosive 2-day rally could mean that many of those shorts have been liquidated. A flash sale of 132k mt was announced this morning to unknown destinations (China), encouraging given the surge in price that we have had. Early this morning it was reported that China imported yet another y-o-y record 83.9 mmt of soybeans in 2016, with December marking their 3rd largest import month on record.

 

Both Kansas City and Minneapolis wheat backed up yesterday’s positive move with another one today.  Chicago wheat continues to trade weaker than other wheat classes with Minneapolis still the best looking market due to continued lack of quality protein wheat.  Factors currently at play are the US dollar falling over the last couple of weeks, a decline in expectations for Russian export business, and of course the reduced acres from the January crop report. Yesterday’s acreage number marked the lowest number of winter wheat acres in the US since 1901.  Over the weekend, the freezing rain could impact the crop but is not currently expected to with some snow cover in place already and the warmer temperatures arriving after the weekend.

 

Cattle managed to keep the momentum going to the upside this week on the charts, albeit in a more up and down fashion.  Factors involved were the weather forecasts and how that might affect the herds and strong sales of U.S. meats.  Feeder cattle charts look very similar to the live markets, and current trend remains higher for now.  Both markets are overdue for a significant break at any time, but the trend remains higher, though both markets are currently acting a little toppy.  

 

Are hogs building energy for the next wave higher or showing signs of a top?  The front months look stronger and look to be building for the next wave, in fact, June and July did close at new recent highs today.  The back months like August and October are more in question and carry more of the topping action that one should look out for. 

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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