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Closing Comments

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Closing Comments

 

Corn pushed up into new highs, +4 ¼ (May) and +3 ¼ (Dec). Funds are in the buying mood and distancing themselves from their former large net short position. The Argentine drought is getting everyone’s attention, as the longer it goes the realization of a significantly lower yield is setting in. The USDA reported a stellar week of exports for corn, with 1,753,000 MT compared to expectations of 1.0-1.5 MMT. Japan was the big buyer this week, followed by Mexico, Egypt, Korea, Saudi Arabia and Honduras. On the year, corn export sales are down 9.5% from last year. President Trump and key lawmakers continued their discussions of possible changes to the RFS, and it is clear the President expects results as “no deal” is unacceptable.

 

Soybeans traders continued to lengthen their positions, on the back of wheat and Argentine drought concerns, +12 ½ (May) and +5 ¾. Weekly exports sales data was released today showing beans with a strong week (ending Feb 22nd), with an announced 979,900 MT vs. estimates of 400K-750K MT. On the year bean sales are down 13% from last year. The USDA reported two private sales, one to “unknown” for 126K MT, and a second to China for 120K MT. The Ag industry is on edge with concerns of retaliation, as President Trump is threatening to place tariffs on steel/aluminum imports, with China being a key steel importer to the U.S. Look for an announcement next week.

 

Wheat continued its meteoric rise fueled by short-covering and issues in the Black Sea Region: Chicago SRW +20 ½, Kansas City HRW +21 ¼ and Minneapolis HRS +13 (May). Additionally, there has been no change in Central U.S. Plains weather, with dryness persisting. There has been some mild hysteria among Black Sea sellers due to logistical impediments that have surfaced and concerns over bitter temps causing possible winterkill. However, it will not be possible to assess the damaging effects of winterkill until spring. This is likely not a long-term market driver, as there is still a large amount of supply in storehouses worldwide. The weekly export sales log showed wheat to be slightly under the range of estimates of 250K-550K MT at 236,300 MT. Wheat export sales are down 12% from last year.

 

Live Cattle had mixed results with April finishing positive, +.050. Rising beef production in the 2nd quarter is keeping a lid on market rallies. It will be important for the weekly slaughter rate to increase incrementally in order to work through the big cattle on feed numbers.

 

Hogs drew more blood from the market with more red numbers today, -.250 (April). Technical action is weak. USDA pork cutout values were down $2.21 after the close yesterday.

 

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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