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Closing Comments

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Closing Comments

 

Corn rallied against a backdrop of a falling U.S. Dollar, +5 ¼ (Mar). Factors helping the cause include closing above key resistance in the 3.55 March area, and declining Argentine and South African production prospects. EIA Ethanol weekly reporting showed production up 0.09% over last week and 1.05% over last year. Ethanol stocks also continued to rise, as they were up 4.65% compared to last week and 9.54% compared to last year. Corn used for ethanol was 110.45 mbu, well above the average needed of 103.943 mbu needed to meet the USDA’s annual estimate. In exports, the USDA announced a private sale of 125K MT of corn to “unknown” destination for 2017/18.

 

Soybeans found strength in a declining U.S. Dollar against a rising Brazilian Real, +6 (Mar). In addition to weather concerns in South America, former Brazilian President Lula was convicted today of corruption causing the Real to rally. It is thought the Real could continue to go higher, making U.S. soybeans that much more attractive. Managed funds are estimated to be sitting on a net short position of 80K contracts, which leaves plenty of room for short-covering. Argentina also is important to the bean equation, as they are the world’s leading exporter of soymeal. If they have a smaller crop, the U.S. would be next in line to pick up the slack.

 

Wheat, as the other grains, was able to take a trip to the topside in large part due to the Dollar falling to new lows. A weak Dollar is friendly to exports and all commodities in general. The winter wheats saw the biggest gains, with Chicago +11 ½ and KC +9 ¾. Minneapolis spring wheat finished +3 ½ (Mar). The USDA export sales report will be delayed until Friday this week due to the government shutdown.

 

Live Cattle were up led by the front month, +.700 (Feb). Strong consumer demand is making up for big on-feed supply numbers. The Cold Storage numbers as of December 31st showed beef stocks at 489.543 million lbs. Look for the Cattle on Feed report this Friday.

 

Hogs were up on strong pork prices and a weak Dollar, +.675 (Feb). With so much of U.S. pork production being exported, the falling Dollar is only adding to its attractiveness in the marketplace. There are big supplies to absorb, but the strong economy and consumers optimism about less withholding on their paychecks is helping to drive demand.  The Cold Storage report pegged total pork stocks at 490.782 million lbs and pork bellies at 39.675 million lbs.

 

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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