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Closing Comments

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Closing Comments

Corn

Quiet trade on no news from the USDA baseline projections.

Quiet and uninteresting trade today in corn with most of the attention focused in soybean and wheat.

USDA baseline projections remained unchanged from the previous table, resting at 88 million acres. Their 15/16 exports project at 1.9 billion while they expect ethanol production to be “relatively flat” over the next 10 years.

Ethanol production for the week ending February 6th averaged 961 thousand barrels per day – up 1.37% versus last week and up 6.54% versus last year. Stocks were 21.135 million barrels – up 0.71% versus last week and up 23.87% versus last year.

Soybeans

Soybean recover on good export expectations and market absorbing yesterday’s cut in stocks.

After selloff yesterday following the USDA stocks report – funds came back today to be buyers of soybean, soymeal and soyoil. Expectations of good weekly export sales reports tomorrow seem to be providing some Wednesday support. Soybean export estimates are for 550-750 mt.

The market strengthened throughout the day, but soybeans have been unable to get a close through the 20 day moving average. Each recent attempt has been rejected leaving November soybeans still on the bottom side since the January USDA report. The market has moved into a consolidation mode refusing to break out of recent highs or lows.

Wheat

Higher wheat today on weather uncertainty.

While forecasts are showing snow cover to accompany incoming Midwest and Plains cold weather – the wheat market looked to build in some weather premium. Yesterday’s USDA stocks report reminded the trade that the world and the US has plenty of wheat.

Additional concerns continue to be events in the Ukraine. The Ag Minister there said the he will take measures to defend local grain markets if a sharp devaluation in their currency (which is already significant) leads to a jump in exports. Russia claims their crop is in bad shape while Ukraine says everything looks fine – USDA left Russia unchanged but raised Ukraine 250k.

Like soybean, wheat is struggling to break through the 20 day moving average for higher. Today’s session strength was met with selling at the end but was still able to hold on to keep all classes in the green.

Beef

Rising supplies and packer margins weigh on beef.

Packers have bids out at $161 live in Kansas but most asking prices remain at $164. In the north some $254 dressed bids from regional packers. Choice cutout is up $1.23 at noon with select cutout up $2.56.

Margins are the worst so far this year. Expectation is that packers keep slaughter restricted into next week as they try to force beef prices higher.

The charts filled the gap on the charts from Monday’s gap higher open.

Pork

Pork prices to be pressured on with rising supplies.

Cash hog bids are mostly $1.00 lower today. One major plant will lose half a shift today due the USDA shutting down the line.

Open interest looks to be distributing and indicators are showing some signs of divergence indicating a bottom could be near – but today’s weak action affirms that for now, the bears are still fully in charge.

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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