Home Market Market Watch Closing Comments

Closing Comments

SHARE

https://www.hoosieragtoday.com//wp-content/uploads//2015/04/image0096.jpg

Closing Comments

Corn

Corn futures erode lower after failing to sustain early session gains.

Exporters shipped 40.5 million bushels of corn in the week ending April 2, up from 30.1 million the previous week and up from the five-year average for the week of 34.4 million bushels. Marketing year shipments total 917 million bushels, down 17 million or 2% from the previous year.

The industry typically ships 56% of final corn shipments by this point in the marketing year, whereas they had shipped 49% by this point last year. Thus far this year exporters have shipped 51% of USDA’s target. As such, shipments to date fall short of the seasonal pace needed to hit USDA’s target by August 31 by 83 million bushels, versus being short by 88 million the previous week.

Exporters shipped 11.8 million bushels of grain sorghum in the week ending April 2, up from 6.8 million the previous week and up from the five-year average for the week of 2.1 million bushels. The entire total for the week went to end users in China.

Marketing year shipments total 232 million bushels, up 140 million or 152% from the previous year. Exporters typically ship 59% of final grain sorghum shipments by this point in the year, whereas they had shipped 43% by this point last year. However, they have already shipped 77% of USDA’s target this year. As such, shipments to date exceed the seasonal pace needed to hit USDA’s target by August 31 by 54 million bushels, up from 47 million the previous week.

USDA is expected to release its first weekly crop progress report of the growing season this afternoon. However, the agency indicates that it will not include corn planting progress data in today’s estimates. The first of those estimates are expected to be released next week.

December corn slipped lower today, leaving a bearish bias on the day, but it still managed to gain on November soybeans. The new-crop soybean/corn price ratio firmed to 2.37, continuing to favor soybeans over corn considering high input costs for the feed grain. The trade expects USDA to boost old-crop stocks by roughly 80 million bushels Thursday.

Soybeans

Soybean prices slide ahead of Thursday’s USDA crop report that is expected to confirm large South American crops.

Exporters shipped 20.8 million bushels of soybeans in the week ending April 2, down from 24.2 million the previous week and down from the five-year average for the week of 21.1 million bushels. The past week’s total included 9.1 million bushels of soybeans destined for China.

Marketing year shipments total 1.649 billion bushels, up 155 million or 10% from the previous year. Exporters typically ship 82% of final shipments by this point in the year, whereas they had shipped 91% by this point last year. This year exporters have already shipped 92% of USDA’s target. As such, shipments to date exceed the seasonal pace needed to reach USDA’s target by August 31 by 191 million bushels, but that is down from 197 million bushels the previous week.

Soymeal basis was steady to weaker today, with business slowly shifting south of the equator. Demand for whole soybeans is making the shift at a much faster pace. USDA will likely further tighten domestic stocks on Thursday, but supplies are still expected to remain at surplus levels, with a huge crop being harvested in South American, expanding acreage here in the United States and expanded acreage six months from now in South America.

Soybean futures turned higher after failing to sustain a probe above overhead chart resistance. The seasonal charts suggest more strength this month, but those wanting to be long (bought) soybeans need fundamental support to sustain their efforts. The trade looks for USDA to drop roughly 15 million bushels off this year’s stocks Thursday, but that’s still a lot of soybeans.

Wheat

Wheat prices sink on poor export demand.

Exporters shipped 13.6 million bushels of wheat in the week ending April 2, up from 11.9 million the previous week, but down from the five-year average for the week of 23.7 million bushels. Marketing year shipments total 703 million bushels, down 273 million or 28% from the previous year. Shipments to date fall short of the seasonal pace needed to hit USDA’s target by May 31 by 35 million bushels, versus being short by 32 million the previous week.

USDA is scheduled to release its first national weekly crop ratings for the growing season at 3 p.m. CDT this afternoon. The trade expects USDA to peg the winter wheat crop at 42% Good to Excellent, down from the five-year average for the week of 47%, but up from 35% in the same week last year.

Prices started the week on a lower note due to poor export data, but the longer-term trend remains higher, despite today’s weakness. Traders will look to this afternoon’s crop ratings for direction. Market bulls need to see impressive weakness in the ratings due to poor demand. Current crop problems would mean much more if demand were decent.

Beef

Live cattle futures fail to sustain a rally despite strong cash prices.

Cash trade emerged late last week, but at higher values once again. Movement began in Kansas at mostly $167 per cwt on a live basis, up $2 from the previous week. However, prices firmed as trade spread, with cattle trading at $167 to $169 per cwt across the Plains, with some trading at $170 in Iowa. Processors also paid mostly $265 to $267 per cwt on a dressed basis in the northern belt, up from $263 the previous week.

Prices paid are getting perilously close to the record high of $171.38 per cwt set in November at a time when seasonal demand for product tends to rise. Last week’s kill was again low at 525,00 head, down 9,000 from the previous week and down 62,000 from the same week last year. Carcass weights averaged 816 pounds, down 2 pounds on the week, but still 22 pounds above the previous year.

As a result, last week’s total beef production came in at 427.7 million pounds, down 8.1 million from the previous week and down 37 million or 8% from the previous year. Calendar year beef production totals 6.085 billion pounds, down 4.1% from the previous year. Today’s slaughter is estimated at just 96,000 head, down 13,000 on the week and down 18,000 on the year.

Product movement totaled 710 loads last week, up from 631 loads the previous week, but down from 737 loads in the same week last year. Choice cuts finished the week at $255.57 per cwt, down $0.37 on the day, but up $4.77 on the week and up $11.45 over the past three weeks. The record high set in January was $263.81 per cwt.

Select cuts finished the week at $249.29 per cwt, down $1.17 on the day, but up $2.58 on the week and up $6.01 over the past two weeks. As such, the Choice/Select spread rose to $6.28 per cwt, up $2.19 on the week and up $6.23 over the past three weeks.

This week’s movement should provide some insight into retail demand for restocking shelves after the first big barbecue weekend of the season. Movement at mid-morning today was typical for a Monday at 72 loads. Choice cuts firmed $0.55 to $256.12, while Select cuts were up $0.87 to $250.16 per cwt.

This week’s cash market is expected to be firmer once again, with seasonal strength in the product market as well. Live cattle futures firmed early today as a result, turning chart signals higher, but with little enthusiasm as skepticism continues to abound. Prices struggled to hold gains through the day, and eventually turned lower from their early-session spike.

Feeder cattle futures followed the fat cattle market, with a bearish reversal posted on the day. The latest CME cash index came in at $222.18 per cwt, up $0.83 on the day, up $3.53 over the past three consecutive days and up $4.45 over the past week.

Pork

Deferred lean hog futures contracts continue to creep higher following USDA’s friendly quarterly hogs and pigs report and on signs that the cash market may be carving out a near-term low.

Traders entered the week with ideas that the cash hog market may be carving out a broad near-term low, based on expectations that the growth in slaughter ready hogs slows as we go later in the year, even as demand rises. Added support came from the Midwest cash market today, which was mostly steady, to up to $1 higher.

The latest CME 2-day lean hog index was posted at a new five-year low of $59.58 per cwt, down $0.04 on the day and down $0.81 over the past week. The index posted losses over the past 21 consecutive trading days, with losses over that period totaling $8.51 per cwt, but the rate of decline has definitely slowed. Now we need to see confirmation of a low by seeing the index start a string of days higher.

Last week’s slaughter is estimated at 2.199 million head, down 71,000 on the week, but up 185,000 from the same week last year. Total pork production during the week was estimated at 485.9 million pounds, up 14.5 million on the week and up 50 million or 11.5% from the same week last year. Calendar year pork production is estimated at 5.942 billion pounds, up 4.9% from the same period last year. Today’s kill is estimated at 295,000 head, down 140,000 on the week due to an extended holiday break and down 107,000 from the same day last year.

Product movement last week totaled 1,769 loads, down from 1,805 loads the previous week and a three-week low. However, the total was well above the 1,458 loads of pork moved in the same week last year. The composite pork product price finished the week at $65.75 per cwt, up $1.31 on the day, but up $0.40 on the week.

The lead April contract needs to converge with the lower cash value by next Tuesday, so it was weaker for much of today’s session. However, the deferred contracts saw continued support based on expectations revealed in USDA’s quarterly hogs and pigs report that the farrowing pace will slow this summer. However, that will likely change if prices in the deferred contracts continue to rise along with cheaper corn prices.

More cases of avian flu have been identified in Minnesota, with the first case in South Dakota late last week as well. However, it would probably take confirmation of the disease in the primary production areas of the Southeast to significantly flood the meat market with cheap poultry, which has not happened yet to this point.

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.

https://www.hoosieragtoday.com//wp-content/uploads//2015/04/image0106.jpg

https://www.hoosieragtoday.com//wp-content/uploads//2015/04/image0116.jpg

https://www.hoosieragtoday.com//wp-content/uploads//2015/04/image0126.png

www.waterstreet.org 
or 1-866-249-2528

 

 

https://www.waterstreet.org/s/ws-80x70.png

Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.

 



Indiana Farm Expo