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Closing Comments

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Closing Comments

The US dollar recovered some of its losses today on news that rising wages and an unemployment rate at eight year lows suggests the labor market recovery remains firm. In equities though, the selloff in technology stocks tempered the recent bounce. Technology companies are struggling to live up to their lofty valuations.

Corn

Corn trades back to the bottom the recent trading range on supportive South American weather and pressure from wheat.
Corn trades back to the bottom of the recent trading range, losing 6 ¼ for the week on cooperative South American weather and weakness in the wheat market.
This afternoon’s CFTC Commitment of Traders report showed Managed Money lightened their short position as of Tuesday by 27,718 contract. This puts them net short -59,479 contracts. This puts them short for their 16th week which matches the length of their spring/summer short position last year.
The trade is anticipating a small increase in Tuesday’s USDA monthly supply/demand report. In the last 5 years corn export demand has increased twice and decreased once in the February report.
The President of Argentina said the government has agreed to increase ethanol blending requirements to 12 percent from the current 10 percent level.

Soybeans

Soybeans fall on better South American weather prospects.
March soybeans fell for the third day to finish the week off 14 ¾ cents on improving weather prospects in dry areas of Argentina. Rains are expected in the driest areas through Monday. The Brazilian government lowered its soybean production estimates, but the 15/16 crop is still on pace to be a record.
Analysts at Safras Mercado estimate that the 15/16 Brazil soy crop is 51 percent forward sold, that is well ahead of last year’s 38 percent pace and the long term average of 44 percent.
Markets in China, the top global soybean buyer, will be closed next week for the Lunar New Year holiday.

Wheat

Wheat suffers technical selling and too much supply.
Technical selling and ample world supplies continue to weigh on wheat market. European wheat futures continue their collapse as Egypt cancels its most recent tender attempt and the concern grows over lagging export demand leaving Europe brimming with stocks at the end of the season.
Analysts anticipate a small increase from the USDA on Tuesday in their monthly supply/demand report.
CFTC data showed Managed Money actually increased their net short position when combining all wheat classes together. Combined wheat stands at -72,790 contracts.

Livestock

Stock markets and caution over cash prices weigh on cattle.
Firmer US dollar, a drop in equities and caution for the cash market had cattle and feeder cattle lower for most of today’s session. Packers in TX and KS bid $138 per cwt for cash cattle, which was in-line with last week’s sales. Sellers were asking up to $142. The disruption from the blizzard could lend some cash value support in affected areas.
Price weighed on the February lean hog contract as it nears expiration and convergence on Feb 12 while the April contract was supported. Some of the buying was reportedly on anticipation of tighter supplies when spring grilling starts to pick up. The morning wholesale pork price gained 34 cents per cwt from Thursday.

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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