Japan shocked the FOREX markets with a move to negative interest rates overnight in an attempt to stimulate the economy. Most doubt the move can do enough to spark their economy – which has been silent for more than two decades now – but there is fear of continued ‘currency wars’ which sent the dollar higher today after recent weakness.
Reports have the NY and NJ Longshoremen walking off the job this morning which affects all the ports in that area.
Weekly Baker Hughes data pegged US crude oil rig count at 498 off from last week at 510 and down from the 1,223 rigs a year ago this week. This is the lowest count since March 2010, but the global oversupply of crude inventories continue to persist.
Corn has the best monthly gain since June.
Support in the corn market to finish January could be pinned to better export demand for corn and dry concerns in Argentina – but a large contributing factor is the huge funds short position providing month end buying and technical buying.
CFTC data showed Managed Money as of Tuesday afternoon had reduced its net short position by more than 71k contracts – leaving them net short -87,197 combined futures and options.
USDA export sales for corn came in at 32.2 mln bu.
Corn enrollments in the USDA load program are up 12.4 mln bu this week to 669.6 mln bu.
March corn was able to match its monthly high from the 25th, but unable to surpass it. This provides corn with the third weekly higher close. Resistance next week in the 3.74 and 3.80 area.
Soybeans reverse yesterday’s losses on short covering to finish the month.
Higher dollar didn’t seem to bother the grain and oilseed complex today as the soybean, meal and soy oil market recovered yesterday’s loses.
Seasonal trends have the soy market putting in a winter bottom the end of Jan which has funds covering shorts in on the possibility of the seasonal strength.
USDA export sales came in at 23.8 mln bu for the week ending Jan 21st.
While there won’t be a comparable to last year due to the newness of the report – the USDA will release a census of the US soy crush industry on Monday. The expected Dec crush rate is at 167 mln bu.
AgRural estimated Brazil soybean harvest at 4 percent complete compared to the prior year period at 6 percent.
March soybeans nearby upside target continues at 8.91 with 8.97 after that.
Wheat higher participating with corn and soybeans and supported by Russia not planning to change the export tax.
Russia announced it would not make changes to its export tax structure on grains. The proposal to drop the wheat export tax would have come at a time when the global market is already struggling to absorb EU, US and Argentine supplies. Wheat market was supported on the news.
Chicago March closed up 7, Kansas City up 7 ¼, and Minneapolis 4 ¾ higher.
Cattle lower on fund liquidation, hogs supported on firm cash.
USDA Cattle/Calves inventory report had Jan 1 at 91.988 mln head vs trade guess at 91.596 mln and 2015 at 89.143 mln. Cattle/Calves are 103 percent of a year ago vs trade guess at 102.
Packers in TX raised bids for cash cattle to $134 to $135 per cwt from $130 to $132 earlier this week. Some processors are short on supplies and facing wintery weather issues but negative packer margins continue to weigh on strength. This morning wholesale choice beef dropped $1.27 and select was up $1.90.
Hogs continued firmer on cash and wholesale pork price support. Cash hogs in the Midwest sold steady to $1 higher and morning wholesale price was up 46 cents from Thursday.
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.