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Closing Comments

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Closing Comments

 

Corn found support in a positive ethanol report and export sale but showed mixed results, + ½ (May) and – ½ (Dec). Exports continued their strong run with a sale reported today to Korea for 138K MT for 2017/18. Ethanol production was on the rise again, according to EIA reporting this morning, pegged at a 2.34% increase over last week and 0.48% over last year. Ethanol stocks were down 2.15% vs last week and 5.15% vs last year. Corn used for ethanol was a solid 109.12 mbu, well above the 104.499 mbu weekly average needed to hit the USDA annual estimate of 5.575 bbu. Regarding the 199 Tax Code provision, it is hoped that a “fix” can be attached to the Omnibus Spending Bill, scheduled for a vote this Friday to avert a government shutdown. Preliminary voting could be as soon as today. Some Democrats are trying to block changes to the tax code, which they feel was put together too hastily the first time around.

 

Soybeans did not have a new story to latch onto, but futures were able to rebound in May (+1 ½) and November (+1 ¼). Currency is taking center stage, with the Brazilian Real near lows. This is not positive for U.S. exports, as China may be even more tempted to retaliate against the U.S. in the bean market over President Trump’s expected tariff announcement tomorrow, which could total $60B on the PRC. Retaliation would not likely be long-term, as the USDA expects that China will increase their soybean exports to 100 MMT next year compared to 97 MMT this year. Attention has now shifted squarely to the March 29th planting intentions report, with nearly universal agreement from analysts that soybean acres will increase from last year’s 89.5 million acres – the question is by how much?

 

Wheat pushed lower across all three complexes, but the soft red rebounded late: Chicago SRW + ½, Kansas City HRW -4 and Minneapolis HRS -3 ¾ (July). The possibility of rainfall across the Western Plains towards the end of the month did not help ease bearish mindsets. HRW is getting closer to being price competitive globally on the break, and managed funds are near a net flat position in KC wheat. Russia remains the heavyweight on the world stage, with estimated wheat exports adding up to 23.1% of the global total.

 

Live Cattle continued its steep descent of long liquidation, with its 5th consecutive day of losses, -1.875 (April). Fears of large 2nd quarter supplies of all meats are overwhelming any hints of bullishness. The March Cattle on Feed report, scheduled to be released this Friday, is estimated to show Cattle on Feed at 107.6% of last year, Placements 100.4% of last year, and Marketings 100.4% of last year.

 

Hogs traded both sides before closing positive in the deferred months. April lost ground, -.675. The Quarterly USDA Hogs & Pigs report is scheduled to be released on March 29th, with increases expected across the board compared to last year. Estimates include All Hogs and Pigs at 103.3% of last year, Kept for Breeding at 101.7% of last year, and Market Hogs 103.4% of last year.

 

In Other News, the Federal Reserve voted 8-0 to increase rates by a quarter of a percent to the range of 1.50% to 1.75%.

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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