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Closing Comments

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Closing Comments

 

Corn was able to push higher as South American weather premium is garnering the headlines, +2 ¼ (Mar). Argentina has a history of being “bailed out” by last minute rains, but the nevertheless the next ten days are offering some serious heat and dryness. Argentina corn planting is behind average coming into the final home stretch. Also, providing support is a more optimistic feeling about NAFTA talks, as Canada, Mexico and the U.S. are expected to announce direction going forward. USDA Weekly Inspections showed corn loadings over expectations, coming in at 993,506 MT vs. estimates of 850K MT. In that vein, Egypt reportedly added a private sale of 115K MT to Egypt for 2017/18. Corn shipments still lag last year by 34%.

 

Soybeans jumped out to large gains in the overnight, and still were able to hold on for a decent close, +6 (Mar). Argentine weather is the main focus, especially with their standing as the world’s leading soymeal exporter. Funds are still in a rather large net short position in beans for this time of the year, allowing for short-covering to help support the market. Weekly export inspections were right on par with projections, as the USDA pegged them at 1,104,978 T for the week ending Jan 25th, compared to estimates of 1,050,000 MT. The U.S. has shipped 1.227 mbu of soybeans this crop year which is down 14% from last year.

 

Wheat was able to generate more positive gains in the winter varieties, in spite of the Dollar showing strength today. The overall trend of the Dollar is down, with bearish trends in place on the index. Chicago SRW and Kansas City HRW both gapped higher on the charts into new yearly highs, finishing +8 ¼ and +10 respectively (Mar). Weekly inspections were well above expectations, coming in at an announced 579,875 MT compared to ideas of around 350K MT. Of the grains, wheat is the closest to keeping up with last year’s exports, trailing only by 4%. U.S. wheat growers are venting to President Trump about non-participation in TPP, as it has allowed Australia to get a leg up with an agreement brokered with Japan to reduce import tariffs. Traditionally, the U.S. has dominated the Japanese market, but now is dealing with serious contention from both Australia and Canada.

 

Live Cattle continued to extend length in spite of a bearish Cattle on Feed report Friday, +1.100 (Feb). Cattle on Feed as of Jan 1st are at 108% compared to estimates of 108% and last month’s 108%. Cattle Placements during December came in at 101% vs. estimates of 97% and last month’s 114%. And, Cattle Marketings during December were penciled in at 99% vs. 99% estimated and last month’s 103%. Very strong demand seems to be outpacing other concerns, with cash trades up to $127.

 

Hogs exhibited sideways trade as the market seemed to run out of buying energy, with most of the deferred months showing modest losses. The February contract gained +.125. Like cattle, supply fundamentals are bearish but the possibility exists for more short-term gains as bellies continue to hold pork values firm.

 

Closing Market Snapshot  

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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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