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Closing Comments

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Closing Comments

 

Corn was able to close higher today up .01 vs. March. Weather in South America is still the focal point. Argentina has missed some recent rains and the forecast in the 6-10 day range went much drier today for the main corn growing areas. Beyond that the 11-15 day forecast is showing a slightly wetter bias. Some consulting companies have lowered the expected corn crop to 38.2 million tonnes down from the USDA’s estimate of 42 million tonnes. A survey done by farm futures showed expected corn acreage for 2018 to be 90.1 million. Only down .1 from last year’s total. Weather and acreage will be the hot topics going forward. How much will they care about weather problems with a giant carryout is the tough question to answer.

 

Soybeans closed at the lower end of the range today up .02 vs. March. Weather in South America is even a bigger factor for soybeans right now. Rains have shifted further north in the short term and are only expected to cover about 25-35% of the growing area. On top of this the temps are expected to rise over the same period of time. Analysts have started to lower expectations for crop size. One weather service projecting a 51.7 million tonne crop compared to 56 million tonnes currently predicted by the USDA. This has the funds continuing to unravel a large short position that they had built up. The market is getting to tough resistance points and may need more weather confirmation to push higher. Brazil’s conditions have been ideal except for some heavy rains delaying some early harvest in the northern areas.

 

Wheat continues to have some underlying friendly fundamentals but just no one who wants to take the chance to be friendly. The drought monitor continues to increase and winter kill in certain areas hasn’t gone away, it just remains un proven. Overall world supply continues to increase and is the main argument for remaining bearish. The International Grain Council raised the global wheat production 1% to 757 million tonnes.  

 

Live Cattle had a very interesting day. Closing lower on the day but off its lows and after breaking above yesterday’s high. The question going into today is will expected short term demand because of tax cuts for the consumer outweigh an unexpected dip in beef prices? We still don’t have that answer.  The market looks good technically and will need to be watched closely as the nearby Feb contract comes into a possible double top on the chart.

 

Hogs closed lower on the day down .75 vs. the February contract. The market is at the upper end of its most recent highs. It may have a tough time pushing through with supply up about 4% from last year. The lower dollar has helped the thought process that demand specifically exports will continue to be strong. Cash was a little weaker yesterday which attributed to our lower close today.

 

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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