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Closing Comments

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Closing Comments

Corn

Corn futures trade both sides of unchanged before settling lower on a general softening of the grain complex.

 

The Department of Energy reports that crude oil stocks rose “just” 1.3 million barrels in the week ending April 10, which is a far smaller increase than some of the double-digit gains seen in recent weeks. Supplies at 483.7 million barrels remain a record for this time of year, but traders are hoping that the small increase provides evidence that a steady decline in rig counts is finally starting to decrease supplies.

 

The same report indicated that ethanol stocks rose slightly to 20.6 million barrels in the week ending April 10, versus 20.5 million the previous week and 16.0 million in the same week last year. Ethanol production during the week slid to its lowest level since the week ending October 17 with an average of 924K barrels per day last week, down from 936K the previous week and down from 953K in the same week last year.

 

The data suggests that the ethanol industry used 98.1 million bushels of corn in the week ending April 10, down from 99.3 million the previous week and down from 101.1 million bushels used in the same week last year. Estimated corn usage to date totals 3.213 billion bushels, up 119 million or 4% from the previous year. Corn usage to date exceeds the seasonal pace needed to reach USDA’s target by August 31 by 15 million bushels, but that is down from 19 million the previous week.

Soybeans

Soybean futures rallied strong, but weakened late in the session despite positive NOPA crush numbers.

 

Soybeans continued stronger today after holding support on Monday, though mid-day strength dissipated into the close after soybeans failed to break-through resistance at 9.60 ½. Weather currently is weighing on the market as well as areas of the Delta, Arkansas, and Kentucky experience 150-300% of normal rainfall. Without a clear planting window emerging soybean acres could swell past USDA’s 84.635 million acres, though there is still plenty of time for forecasts to shift drier and allow ample corn acres in the ground.

 

The National Oilseed Processors Association reports that its members crushed 162.8 million bushels of soybeans in March, up from 147 million the previous month and up from 153.8 million bushels in the same month last year. This brings NOPA crush for the soybean marketing year to date to 1.057 billion bushels, up 13,324,000 bushels from the previous year. NOPA crush to date exceeds the seasonal pace needed to hit USDA’s target by August 31 by 16 million bushels, up from 3 million the previous month.

Wheat

Though wheat may be green in the field, it remains red on the board as high price and improving weather continue to pressure it through its recent lows.

 

Wheat was lower overall again today due to rain in the hard red winter wheat country later this week and into the weekend is expected to be good for crops.  Additional moisture will be needed and may occur around April 23-25th and if both events occur as advertised there will be some improved wheat development and production potential. Regardless of the condition of the national crop, international demand remains tepid for domestic wheat at its relative cost to other world wheat suppliers.

 

Minneapolis and Kansas City Wheat made new technical lows today on the good forecasts, while Chicago wheat is still holding grudgingly to support.  The K.C. – Chicago wheat spread is also still hold support today and gives hope that prices can put in a corrective bounce in the relative short term, along with the dollar putting in a second consecutive day of weakness.

Beef

Live cattle trade higher as beef prices firm of ahead of cash trade and technical momentum.

 

Live cattle traded sharply higher today with follow through technical buying.  Packers bought a significant number of cattle in the south yesterday at $162-$163 live for May delivery.  Trade happened in both Kansas and The Panhandle.  The Panhandle trade was the largest volume we have seen in quite some time.  This seems to indicate just how tight cattle numbers will be into May when packers need to expand slaughter to meet spring grilling demand.  So far today, cash markets are undeveloped with bids posted at $159 in Kansas for live but asking $165-$166 and asking $265 dressed in the north. 

 

Midday boxed beef was higher with choice at 260.63 up 2.18, select at 250.77 up 1.32 while 79 loads traded.  Spot volume is light today but that is partly a function of tight supplies.  Fat trimmings values are rallying as spring hamburger demand starts rolling.

 

Feeder cattle held on to triple digit gains as the cattle market extends higher.

Pork

Lean hog future were lower on avian flu fears.

Futures were sharply lower with a confirmed case of Bird Flu at an Iowa Turkey farm.  Iowa is now up to 22 Turkey farms reporting Bird Flu and Turkeys lost nearing 1.5 million.  We saw aggressive technical selling as well ahead of April expiration.

Cash hog bids are $1.00-$2.00 higher today.  Numbers are tightening.  Even though last week’s slaughter was below 2.2 million head for the second consecutive week, barrow and gilt weights in Iowa/S. Minnesota only increased 0.3 lbs. to 283.8 lbs.  That’s now down 1.9 lbs. from last year’s 285.7 lbs. 

Pork cutout is up $0.78 near noon.  Hams remain firm on building demand for deli season.  Bellies have become very volatile.  Sources indicate that supplies are varying quite a bit between packers and locations which is giving wide swings in 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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