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Closing Comments

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Closing Comments

 

Corn continued range-bound trade ahead of the Report on Friday, +1 ¾ (Mar). There is no fresh news to speak of and trading volumes waned compared to yesterday’s strong selling. Yesterday featured a massive jump in open interest at the CME. The market seemed to take the selling in stride and absorb the impact, and it would appear that bearish downside risk is somewhat limited from here, even if the Report is not bullish. Look for EIA Ethanol reporting data tomorrow to see if strong production resumes from a lighter last week, with ethanol producer margins negative on average.

 

Soybeans felt continued pressure from selling, as traders are wary of bearish fundamentals heading into Friday, -3 (Mar). South American weather is not a big concern, but one story that has raised a few eyebrows is soybean rust growing across Central Brazil, from plenteous recent precipitation. This could result in decreased yield estimates. Brazil will be out with CONAB estimates on Thursday ahead of the USDA numbers on Friday. Look for China trade data in the overnight.

 

Wheat was up today across the board: Chicago +4 ½, Kansas City +5 ¾ and Minneapolis +5 ¼. Influencing the market, is the award of soft wheat licenses to the U.S. by Morocco, which was originally thought to be going to the EU. Russia won another bid for 115K MT of wheat in a tender today. It seems as if it is the world against Russia, as they are bursting at the seams with crop to export, and a very formidable competitor from a price standpoint. With regard to the Report on Friday, winter wheat acres will get the most scrutiny. It is expected wheat acres will decrease from an already record low planted last year. Look for a price trend to emerge that may endure until the March report.

 

Live Cattle were able to reverse course temporarily from the recent plummet, but bumped into resistance at the 200-bar moving average. The February contract settled at 117.675, +.450. It is thought that strong beef prices will help stabilize the market, as there are signs of good consumer demand with extra disposable income to hit pocketbooks soon from Trump tax reform.

 

Hogs traded mixed across contract months, with the front month February, +.200. The CME Lean Hog Index continues to rise, up another $.59 to $64.22. Like cattle, strong consumer demand resulting from more disposable income should help to underpin the market. According to Hightower, increased competition from more U.S. packing houses has also helped support active speculative buying and a strong uptrend.

 

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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