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Closing Comments

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Closing Comments

 

Corn traded a tight range with May finishing +1 and Dec + ½. Today featured a measure of indecision at the CBOT, as traders position themselves ahead of the USDA Report on Thursday. Managed funds have taken a very large net short position earlier in the year in corn and have turned it into a stout net long position. Farmers have been taking advantage of the opportunity to sell both old and new crop, which has helped to keep the rally in check. Many in the industry are becoming much more “friendly” corn, as a mildly bullish sentiment is in the air. Demand is strong of late in both exports and ethanol, but this is competing with trade tensions and concerns over possible changes to the RFS by Congress.

 

Soybeans and soymeal showed some corrective action today after a string of recent gains, May beans -2 ¾. However, November beans continued their incremental march forward, +3 ¼. Argentina forecasts have remained dry through the growing cycle, but this story appears to be losing some steam. Argentina’s losses could be of historic levels, comparing to 2008/2008. It is important for meal to lead new rallies, but recently soybeans have outpaced meal. The meal and bean markets have become technically overbought, and traders are trying to position themselves ahead of the Report on Thursday. In export news, China put in a nice order for 120K MT on the daily sales log, a good sign after recent trade retaliation concerns.

 

Wheat showed volatility and an unwillingness to succumb to the bears, as Chicago and KC were able to reverse large losses, finishing –2 ¼ and -4. Minneapolis was the lone gainer, +3 ¼ (May). The Black Sea region is experiencing more favorable temps which is helping with logistics. Will the Plains also receive more rains with La Nina ending? Egypt’s GASC put in another order for Russian wheat of 175K MT today. Even though Russian prices have risen $3-4/MT, they have still been able to win the business. Also, helpful to global wheat trade in general, is Iran filling a supply shortage by signing an agreement with Russian and Kazakhstan. They will be purchasing 100K MT a month.

 

Live Cattle traded in a wide range, ending negative, after poking out to a new short term high, -.400 (April). The overall trend has been down the last several sessions, with higher production getting the edge over higher beef prices. The USDA choice boxed beef cutout was up $.71 yesterday.

 

Hogs showed losses across the contract months after two consecutive positive sessions, -.600 (April). Retail demand should continue to strengthen with retailers booking hams for Easter and with grilling season soon upon us. Overall large supplies along with NAFTA concerns are acting as a check and balance to the market.

 

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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