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Closing Comments

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Closing Comments

Crude oil put in a new low today as the market is convinced that an OPEC production cut is unlikely until US production declines by another million barrels per day. However a report this afternoon offered the market some hope on inklings out of Saudi Arabia that there may be some possibility of production cuts.

Global debt and economic concerns added to the market anxiety today leading to the explosion of gold (the global safe haven) in to one year highs and continued the collapse of bond yields, signaling the doubt the market has in the Fed’s ability to raise interest rates anytime soon.

Corn

Corn traded everywhere and finished where it started, caught between ample supply and the nearing anxiety of spring weather.

Weaker exports and soft ethanol futures tempered early short covering strength in the corn market today. USDA export sales were disappointing at just under 16 mln bushels, just under half the low end of expectations. This disappointing number is the lowest in five weeks and underscores the battle faced out of South America and from global feed wheat supplies.

USDA attaché report from China says to expect continued artificial suppression of grain imports due largely to their huge grain stocks affecting trade policies. They expect large 2016 production again in corn, rice and wheat.

Soybeans

Better than expected export sales help short covering strength in soybeans.

USDA export sales for soybeans came in at just over 24 mln bu, above trade expectations.

Funds reportedly bought 9,000 contracts.

Technically March soybeans were able to find support at the 8.60 zone as they have been able to since September. Overhead resistance is the bottom of a reverse trend line – 8.75 tomorrow in March and they still have the gap open around 8.90.

Wheat

Wheat can’t hold on to early gains amid global supplies and technical selling.

USDA wheat export sales of 9.6 mln bu were up from the previous week and 6 percent from the prior 4 week average.

The USDA’s Buenos Aires bureau says Argentina’s wheat harvest has produced poorer than expected quality wheat with a significant quantity below 10 percent protein. Millers are now having to pay twice as much for quality wheat than a year ago.

Livestock

Cash trade weakness coupled with lower equities close lower.

Live cattle futures fell on disappointing prices for cash cattle. Cash cattle this morning in the Plains brought $128 to $134 per cwt, down from mostly $134 to $136 last week. This morning’s choice beef price dropped 99 cents per cwt from Wednesday to $217.20. Weakness in the US stock markets added to the anxiety.

Hog futures drew strength from traders selling cattle and buying hogs with the hog fundamentals looking more supportive when looking at historic norms vs cattle. Average cash hog price in IA/MN this morning was up 3 cents per cwt from Wednesday to $62.90.

As of Monday February 29th, pending CFTC approval, the proposed trading hours for CME Globex Live Cattle, Feeder Cattle and Lean Hog futures and options will move to 8:30am to 1:05 pm CT Monday through Friday. According to the statement from the CME, during 2015 roughly 87 percent of livestock futures and options trades occurred during these proposed hours. The CME proposal in meant to condense volume to increase liquidity and reduce price volatility.

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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