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Closing Comments

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Closing Comments

 

Corn was able to eke out a positive gain, +1 ¼ (Mar). Providing support is increasing crude oil prices, a declining U.S. Dollar and growing Brazilian ethanol demand. Export sales were announced a strong 1,531,000 MT by the USDA today vs. estimates of 900K-1.3 MMT. Additionally, the USDA announced a private sale today of 125K MT to “unknown” destination for 2017/18. But, on the year corn exports are down 22%. The U.S is currently in good position vs. South America as Brazil will likely not return as a major export threat until July and Argentina through June.

 

Soybeans struggled to stay positive with a unimpressive export report, a sliding meal market and a slightly wetter Argentine 7-12 day forecast. It is likely traders are taking some profits before the weekend. This sent soybeans sharply lower into the close, finishing –6 ¾ (Mar). Soybeans came through on the low side of export projections at 759,300 MT vs. estimates of 800K-1.3 MMT, which is 50% less than last week. Exports need to catch up quickly as the seasonal window is closing.

 

Wheat continued to receive a boost from a declining Dollar and rising crude oil prices. Winter wheats had the largest gains, Chicago +6 ½ and Kansas City +8. Minneapolis spring was not far behind, +4 ¼ (Mar). Wheat weekly exports were solid at 453,700 MT compared to expectations of 250K-500K MT. The Commitment of Traders report today will be key, because if traders still are very net short there will be plenty of room for more short covering next week. Today’s action got closer to resistance at the 100-bar moving average.

 

Live Cattle were able to stabilize after yesterday’s big drop, gaining back much of what was lost, +2.125 (Feb). Technicals are indicating an overbought market, and expanding production this year will provide pressure. The monthly Livestock Slaughter report showed steer/heifer slaughter at 99% of last year, December beef production declined 6% from November and 1% from last year. The Cattle on Feed Report will be announced after the close today and will be influential to trade on Monday.

 

Hogs stayed within the recent trading range, giving back some profits with February -.200. Bringing pressure are bearish weight numbers, substantially more pork bellies in cold storage and expected higher production ahead. The market looks vulnerable fundamentally, but exports and domestic demand will play a key role.

 

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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