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Closing Comments

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Closing Comments

Corn traded both sides of unchanged today, – ¾ at 3.57 (May) and – ½ at 3.82 (Dec).  Corn and the other grains are trading weather, and short-term includes a planting window that will allow progress to firm up.  However, precipitation in the next 6-10 days is expected to be up for the entire country.  Stats Canada’s acreage intention report today was over expectations almost across the board.  Corn was projected at 3.75 million acres vs. the expected 3.2 million acres and last year’s 3.32.  South America continues to position itself as an alternative to U.S. corn.  In addition to Argentina courting Mexico with tariff-free imports, the Brazilian government is stepping in and subsidizing the shipping industry to help corn exports.  However, demand is good and U.S. exports are still up convincingly over last year-to-date, at 50.1 MMT vs. 34.9 MMT. 

 

Soybeans were able to round out the week with a nice gain, fueled in part by Chinese interest for U.S. soybeans off the PNW, +4 ¼ at 9.51 (May) and +5 ¾ at 9.59 ½ (Nov).  Soybean sales announcements have been scarce of late, but today brought an upbeat tone to end the week, with a private sale of 146K MT to “unknown” (rumored to be China) for 2016/17.  China is also reportedly interested in more for August.  Demand from China is strong, causing some to up their forecasts of Chinese bean imports to 91 MMT from the USDA’s 88MMT for 2016/17.  Stats Canada acreage intentions were reported to be 6.96 million acres vs. expectations of 5.9 million acres (up 27%) and 5.46 million acres last year.  Argentina is dealing with a nagging issue with port workers at Rosario, as they are acting out civil disobedience by blocking the entrance in hopes of higher pay.  As far as Argentine weather, the outlook is trending favorable for soybean harvest.

 

Wheat trade was mixed today, with Chicago SRW -1 ¼, Kansas City HRW +1 ¾, and Minneapolis HRS -1 ½ (May).  Stats Canada reported wheat acreage intentions overall at 22.4 million acres vs. previous estimates of 21.3 million acres and compared to last year’s 23.2.  A couple notable developments, the USDA is estimating Australia’s wheat crop to be down from 35 MMT last year to 24 MMT this year.  Also, there is growing concern in Europe that dryness may damage the wheat crop if needed rains do not arrive soon. In that vein, France’s soft wheat crop conditions deteriorated from 89% to 85%, good/excellent.  And in Russia, May and June weather is always the major determining success factor, as dryness and heat can play a big role in turning the tables on what can appear to be a bumper crop in late April.

 

Live Cattle added to their gains of the last two weeks, +.225 at 116.700 (June).  Packer margins are positive, boxes are firmer, and choice and select cuts are up.  The Cattle on Feed report will be released this afternoon.  Estimates are as follows: Cattle on Feed 99.7%, Placements 106.5%, and Marketings 109.4%.  Look for results in Monday’s comments.

 

June Hogs have not been able to board the seasonal rally train, as futures closed down today at 68.325, -.350.  This was their fifth consecutive day in the red.  The silver lining could be that export demand is much stronger than expected, as pork prices have held firm in the midst of falling futures. Last week’s sales of 36,100 tonnes was the highest since January 19th, and cumulative 2017 sales are up 18% over last year. Keep an out for a nice seasonal bounce, as the recent sharp break is bound to attract demand from China and others.

 

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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