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Closing Comments

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Closing Comments

News out of China’s industrial sector continues to underscore the economic weakness as they reported their manufacturing contracted the most in January since 2012. Fortunately the contraction in manufacturing has not correlated to a reduction in protein demand by the Chinese consumer.

The US dollar index gave up much of Friday’s gains, bringing it back into the consolidation range of the past couple months.

Corn

Corn recovers almost all early losses for the second best close of 2016.

USDA export inspections showed the best inspections since December 17th for corn, coming in at 26.842 mln bu. Seasonally corn exports begin to tick higher over the next few months – but the market has plenty of lifting to do as it’s off 20 percent from last year’s pace.

Some bearish tone coming out of South America as dry areas in Argentina are posed to get moisture relief in the next few days.

Soybeans

Soybeans end lower on cooperative SA weather, but near the top of the recent trading range.

USDA export inspection came in at 42.382 mln bu. Better than expected by the market but continues its seasonal decline as export sources continue to switch south of the equator.

USDA published their monthly crush report this afternoon showing Dec crush at 167 mln bu vs 165.7 mln last month. Oil stocks came out at 1.929 bln lbs vs 1.901 in Nov and meal stocks showed just 270k mt vs 343 in Nov.

Wheat

Wheat continues to struggle against ample inventories and lagging export demand.

Good conditions in the plains and lack of production story out of Europe is keeping the market focused on the plentiful wheat supplies and ho-hum export market. The strong dollar keeps the US export business relegated to the usual suspects rather than being at the table for a bigger share of the US supply.

USDA export inspection came in much better than last week at 10.359 mln bu – but still well off the pace needed to keep up to expected pace.

The winter storm in the US plains is expected to bring moisture and snow insulation to some HRW areas.

Livestock

Up and down session for the livestock sector. Cattle end up finding support off last week’s cash strength.

Boxed beef cutout values were higher on Choice and lower on Select on light to moderate demand and offerings. Choice chuck and loin cuts firm while Select weak to lower. Last Friday, processors in the southern plains bought cash cattle for $138 per cwt, up from $130-134 the previous week.

Nearby hogs felt the pressure of the premium to the lean hog index working toward convergence but losses were limited on firm wholesale prices and continued concern over weather related disruptions.

Closing Market Snapshot

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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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