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Closing Comments

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Closing Comments

 

Corn found enough positives to outweigh the negative action of beans, +5 (Dec). The bean complex is not the only interested party to trade negotiations with the PRC this week, as sorghum will likely be impacted which would in turn influence corn. A favorable outcome to the talks would likely result in U.S. sorghum being allowed back into China which in turn would increase domestic demand for ethanol and feed, according to Feltes. Also, corn will not be able to sustain a strong market without beans. Planting progress data released yesterday is showing corn right in-line, but lagging significantly in the north, specifically MN and SD. In global weather, forecasters are watching Southern Brazil, as safrinha corn is getting into pollination time and could use the rain. Informa came in with their estimate for U.S. corn acres at 89.0 million, up 950,000.

 

Soybeans made a big comeback from a 10 point deficit early in the session, +1 ½ (Nov). The U.S. Ambassador to China, ex-IA Governor Branstad, has said that there is still a wide divide between the two sides and resolution of trade disagreements. This coupled with a strong Dollar and a weak Brazilian currency, is putting a damper on rallies until further news is available. There were no new export sales announcements this morning. Planting progress showed soybeans off to a great start, at 35% complete, well above the 26% average and 30% expected. The April NOPA numbers showed soymeal exports at 946,291 tons vs March’s 878,582, soyoil stocks 2.092 billion lbs vs expectations of 1.980 billion lbs, and the soybean crush 161.016 mbu compared to estimates of 160.97 mbu. The crush was as expected (16% higher than last year) while stocks were significantly higher. Informa pegged soybean acres in the U.S. at 89.4 million, up 430,000.

 

Wheat was sluggish for most of the session before surging to positive territory. Crop conditions showed a 2% improvement to 36% G/E, but still well below last year’s 51%. Chicago +2 ¼ and Kansas City EVEN (July). Egypt indicated that Ukraine came in with the lowest offer for their tender of 60K bu, giving them the purchase transaction. Looking at world weather, the Black Sea area is slated to receive rains over the next ten days, while Australia and Canada are being watched for continued developing dryness. In spring wheat, the USDA sees the crop 14% emerged, which is well behind last year’s 37%. Informa predicts spring wheat acres will be 12.4 million, down 200,000 from previous. Minneapolis HRS finished +3 ½ (Sept).

 

Live Cattle continued its sharp decline after yesterday’s bearish technicals, -1.650 (June). It is within the realm of possibility that futures test lower resistance at 97.075. Packers seem to be well-stocked for their needs which is presenting as weakness in the cash markets.

 

Hogs followed the steep dive of cattle, but were able to bounce back for a respectable close, -1.425 (June). The last few days have exhibited a measure of volatility, with traders watching the battle of supply vs demand. June futures are still at a large premium to cash, which is holding down 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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