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Closing Comments

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Closing Comments

 

Corn featured mixed trade before finishing – ½ (Mar) and EVEN Dec. In spite of the government shutdown, the USDA released weekly inspections today. Corn tallied 668,946 MT for the week ending Jan 18th vs. expectations of 900K MT. Over the weekend, South Korea made a splash, as they bought 4-5 cargoes that will be likely sourced off the PNW. It is important for the U.S. to have a strong second half of exports. In South America, Argentina is having mixed weather, with some areas getting deluged with rains in the north, while the central part of the growing region has been hot and dry lately. Argentina released corn crop ratings on Friday which showed 45% of 1st crop corn and 53% of 2nd seeded corn to be poor to very poor, with no excellent ratings. The Commitment of Traders report on Friday showed managed funds extended their net short position to 258K contracts.

 

Soybeans continue to build in weather premium, as weekend news out of Argentina left doubts, +7 (Mar). With Argentina the world’s leading soy meal exporter, soy meal futures experienced sharp gains which also provided major support to the complex. Today’s trade also featured a close over the all-important 10.00 mark for the Nov contract. USDA weekly inspections showed soybeans over expectations, as they came in at 1,419,430 MT compared to estimates of 1,200,000 MT. It was reported by JCI that Chinese imports totaled 9.55 MMT in Dec and estimated at 8 MMT for Jan. PRC crushers still have 5 MMT to buy for Feb needs and 4.8 MMT for March needs.

 

Wheat was able to trend positive off strength in soybeans. Chicago SRW +3 and Kansas City HRW +1 (Mar). Minneapolis spring had a small setback, -1 ½ (Mar). USDA weekly export inspections for wheat were right on the mark, as they were just over expectations of 325K MT at 337,980 MT. Wheat does not have a big story currently, but with managed funds positioned at such a large net short, it does not take much to spur some short covering.

 

Live Cattle found support in a western snowstorm and positive cash market news, +1.650 (Feb). In addition to a Kansas/Nebraska winter storm, cash cattle was up $3.00 to close last week for markets in KS, NE and TX. Will demand be strong enough to offset the short-term supply?

 

Hogs continued Friday’s pattern of selling, -.275 (Feb). Factors providing weakness include a warmer weather outlook and a near-term spike in pork production. Meanwhile, USDA pork cut-out values Friday afternoon were up 50 cents to the highest level since Dec 12th. On the export front, this week will be critical for NAFTA, as talks continue – all eyes will be monitoring whether a breakthrough occurs after several consecutive non-productive negotiations.

 

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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