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Closing Comments

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Closing Comments

 

Corn continued to feel the pressure of mounting fund selling, as traders expanded their net short position ahead of the USDA report on Friday, -4 (Mar). There is not a story to serve as a check and balance to bearish mindsets at this time. The CBOT continues to trade in the sideways range pattern that was established last fall. On the other hand, if the USDA does not offer a bearish report, who will keep selling the market lower? USDA weekly loadings data showed corn inspections at 849,226 MT for the week of January 4th, well above expectations of 650K MT. Additionally, a private sale to Mexico of 102,100 MT of corn was reported for 2017/18.

 

Soybeans saw more traders opting for the short side, as they fortify positions to withstand their perception of the USDA report due on Friday, -4 (Mar). Beans were just shy of expectations on the weekly inspection roll, coming in at 1,183,089 MT vs. estimates of 1,200,000 MT. The daily log showed two sales – a private sale of 132K MT to unknown destination and a second private sale of 120K MT to Egypt, both for the 2017/18 marketing year. China food demand continues to expand as their country has been able to decrease the number of citizens living below the poverty line from 99 million in 2012 to 30 million in 2017. However, overall U.S. soybean exports are down 14% below last year, as record South American crops have provided formidable competition to the PRC.

 

Wheat needs a fresh story to stem the tide of selling, -3 (Chicago). All three complexes showed some bounce back today, with a measure of selling exhaustion later in the session. KC finished –4 ¼ while Minneapolis ended -2 ¼. USDA weekly wheat inspections were announced at 234,418 MT vs. estimates of 300K MT. Now that the brutal U.S. Plains weather story is behind, wheat is battling to stay competitive with global pricing, as the small rally made U.S. wheat more expensive in the global market.

 

Live Cattle gapped lower for the second session in a row, dipping below the 200-bar moving average, -2.025 (Feb). Friday featured a lock-limit down performance, as traders liquidated positions – today was more of the same. Cash trade has been lower than expected, and the long-term trend is viewed as bearish.

 

Hogs went the opposite direction from cattle, gapping higher and through resistance at 73.300, which was a high posted previously on November 1st, +1.550 (Feb). Underlying support is coming from solid pork values which held through very cold Midwest weather. The CME Lean Hog Index was up $.88 to $63.63 on Friday. Warm Midwest weather ahead should boost production and may lower cash values.

 

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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