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Closing Comments

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Closing Comments

The day began with fireworks in the energy market as Russia, Saudi Arabia, Qatar and Venezuela stating they would freeze their production levels at that of January if the other OPEC members would commit to the same. This was interpreted by the market as early signs of coming production cuts – but the enthusiasm was short lived as Iran, now a participant in global trade, stated that they were going to continue to increase their output – however they suggested that Saudi Arabia should cut production to support global prices. (Isn’t that like Chevy suggesting that Ford build fewer trucks?)

Corn

Corn closes on its highs on short covering from supportive export inspections.

USDA export inspections showed corn coming in at 27.2 mln bu which was at the top of the market expectations.

Short-covering and technical buying helped support corn in conjunction with the broad based ag commodity buying – such as in the wheat market. CFTC data Friday showed speculators had increased their net short positions by 50,000 contracts, some of those short positions were cleared out today as the market begins to prepare for spring acreage reports and weather patterns.

Soybeans

Soybeans support on good inspections but can’t get follow through from today’s NOPA report.

Soybeans rose to the highest level since Feb 4 on exports inspections coming in well ahead of expectations and slow loadings of Brazilian soybeans. The inspection of more than 64 mln bushels was well above the expectation of 37 mln and the biggest inspection since November.

Mid-day though the market retreated on bearish information out of the National Oilseed Processors Association report showing the monthly crush coming in below expectations. January crush came in at 150.453 mln bu, below the market estimate of 155 mln and behind the Dec pace of 157 mln. This is the smallest crush for Jan since 2012. Soy oil stocks came in just below the market expectation.

Spot offers for US soymeal at rail and truck markets were steady today, but had a firm tone as supplies have tightened due to the slowdown in the crush pace and tightened processor profit margins.

Wheat

Wheat found short covering support in its oversold condition.

Egypt was back in the import/export news today with a rejection of a shipment of Canadian wheat, saying it contained ergot fungus. This is latest in a series of rejections which has caused serious concern over Egypt’s new tough quality rules which have disrupted the country’s massive wheat imports.

From a global outlook, the winners the past few months have been Black Sea and Argentine origins as ample supply and weak currencies have put them at a competitive advantage. France has landed in the middle as it works to unload ample supplies. The US is bringing up the rear as the strong dollar continues to weigh on the US ability to compete on a consistent global basis.

Today’s USDA export inspections showed wheat coming in at the upper end of expectation with just over 14 mln bushels.

Livestock

Cattle and feeders limit up on supportive equity markets and fund buying while hogs trade inside Friday’s range.

The market participant frustration over volatility in futures continues today – this time to the producer’s advantage with limit up moves in live cattle and feeder futures. The market will be looking to the end of the week for more direction from the cash market.

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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