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Closing Comments

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Closing Comments

US and European shares rebounded from recent weakness today with better US retail sales data providing a boost. US crude prices rallied today off 12 year lows, marking the biggest rally percentage wise in seven years on talk that OPEC ‘entertaining’ cuts in production.

US grain and livestock markets will be closed Monday in observance of President’s Day.

Corn

Corn can’t shake demand concerns, losing 7 cents for the week on fund selling.

This week’s poor export sales, pressure from feed wheat and renewed fund selling plagued corn into the end of the week prior to the long weekend.

According to CFTC data, Managed Money sold -43,306 contracts for the week ending Tuesday to take their net short position back just over -100k contracts.

Valero (#3 ethanol producer and #1 refiner) has filed lawsuits against the EPA in an attempt to push the agency to alter its renewable fuel policy.

Support in the March contract below the market will be at 3.57 and 3.53 below.

Soybeans

Soybeans are able to hold on to yesterday’s gains on hope for better post-holiday China trade.

While gains were limited by a somewhat stronger dollar, ample global supply and the onset of Brazil’s harvest – soybeans were able to hold on to yesterday’s short covering rally going into the holiday weekend.

Rosario Grain Exchange estimates Argentina will harvest 58.5 mln tonnes of soy in 15/16 as long as the weather is favorable in the coming weeks. This was up from their previous estimate of 55 mln tonnes.

AgRural raised its estimate for the 15/16 soy crop to 99.7 mln tonnes on Friday, up a million tonnes from last month thanks to more rainfall in January.

NOPA crush for Jan will be released on Tuesday at 11 am. The avg trade guess is looking for avg crush at 155.267 mln bu. Oil stocks are seen at 1.540 bln lbs, up from 1.481 bln lbs in Dec.

Brazilian harvest is progressing well. The state of Parana estimates harvest at 30 percent (double last year) and safrinha (double crop) corn planting at 47 percent vs 30 percent a year ago.

Malaysian palm oil futures extended gains to reach their highest level in nearly two year which has continued to lend support to the soybean oil market.

CFTC data showed that Managed Money came back as sellers of the soybean market, increasing their short positions by -42,274 contracts to -68,137. In soybean meal, non-commercial speculative traders put in a new record short position.

Wheat

Wheat continues consolidation at the bottom on good weather and ample supplies.

Egypt’s state grain buyer bought 60,000 tonnes of Romanian wheat, representing its first successful purchase after cancelling consecutive tenders in the past ten days.

Europe’s Matif wheat has been able to show some selling exhaustion after putting in a key reversal on the daily chart on Wednesday and a good “hammer” on the weekly chart.

CFTC commitment of traders showed Managed Money is now short -81,045 after selling -32,360 contracts in the week ending on Tuesday. In Kansas City, non-commercial speculative traders put in a new record short position.

Livestock

Live cattle close lower on cash concerns. Feb hogs expire today while April continues to hover near $70.

Live cattle finished weaker following this week’s cheaper cash prices and concern over continued declines in next week’s abbreviated trade.

Packers in the Plaines paid $128 to $134 per cwt for cash cattle that the previous week were bringing $136. Wholesale choice beef slipped 35 cents per cwt from Thursday to $216.67 while select dropped $1.00 to 213.27.

The Feb Lean Hog contract expired at noon today, settling up 0.425 cents per lb at 65.950 – nearly matching the exchange’s hog index for Feb 10 at 65.60 cents.

Hog fundamentals look to continue to be supportive, more so than cattle. Morning wholesale pork price was up 38 cents per cwt from Thursday. Cash hogs in the Midwest traded mostly steady with supplies sufficient enough for packer demand.

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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