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Closing Comments

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Closing Comments

At the USDA Outlook Forum, the KC Federal Reserve executive said slowing demand from China and the strength in the US dollar weighing on farm incomes could lead to tighter credit standards. However, the exec said he is not calling for the sky to fall, but noted farmer’s accumulated buffer may give them more insulation.

The Outlook Forum didn’t provide the bulls much fodder on projected 16/17 ending stocks, more detail below.

Weekly Baker Hughes report pegged US crude oil rig count at 400 down from last week’s 413 and down from the year earlier at 986.

Former pres candidate and NJ Gov Chris Christie endorsed Trump…

Corn

Corn finishes lower on the Outlook Forum forecasting supplies to rise to 12 year highs during the 16/17 year.

The fourth lower day corn capped the toughest week for corn since November as funds turn to technical selling and face the continued ample global supplies.

In today’s release at the Outlook Forum the USDA said it expected the 16/17 corn crop to rise 2 percent to 13.825 bln bu based on an average yield of 168 bu per acre. Corn ending stocks were seen at 1.977 bln bu.

The trade continues to analyze weather patterns as spring approaches and anticipates the March 31 planting intentions report which will include the first farmer data for the year from the USDA.

Commitment of Traders report showed as of Tuesday, Managed Money had slightly trimmed their short position by 3,602 – leaving them net short -134,334. They have proceed to remain sellers since Tuesday’s report.

Soybeans

Outlook Forum expects lower production for 16/17 but ample stocks and South American harvest weighed on beans to close the week.

Soybeans saw their biggest weekly drop since December and the first weekly decline in three weeks on weakness in the soy meal cash market and progress in South American harvest.

USDA Outlook Forum predicted that soybean production would fall to 3.910 bln bushels from 3.930 bln in 15/16. Yields were seen dropping to 46.7 bu per acre from 48.0 and ending stocks were expected to tighten by 10 mln to 440.

Anticipation of South American supplies continue to weigh on the market as analysts continue to expect yields to maintain or build on recent expectations.

This afternoon’s CFTC Commitment of Trader’s report showed Managed Money as of this Tuesday had reduced their net short position by 21,331 contracts, leaving them short just over -22k.

The continuation soybean chart has price back to the bottom of the multi-month trading range, above November lows but the lowest close of the trading range yet.

Wheat

Wheat lower, but not new lows on hints of global demand.

USDA Outlook Forum forecast wheat production at 1.991 bln bu on an average yield of 45.9 bu per acres with ending stocks seen at 989 mln bu, up 23 mln from 15/16 ending stocks.

The large domestic and foreign supplies continue to weigh on the wheat market while the stronger dollar and lack of threatening weather keep wheat from finding its way out of the oversold condition.

Commitment of Traders report has Managed Money returning as sellers of Chicago and Kansas City wheat. Selling -14,313 contracts in Chicago for a net short position of -98,680.

Livestock

Cattle were weighed down by profit taking.

Boxed beef cutout values were lower on moderate demand and offerings. Choice was off -$1.09 to $217.67 while select was -$1.99 lower to $211.99. The market continues to wait for cash trade. Bids in the Plains were at $135 to $136 with sellers holding out for at least $138.

In hogs, morning average cash hog price in IA/MN dropped $2.06 per cwt to $64.36. More hogs are available after a return to operations following the recent winter weather. Bulls are hoping lower nearby supplies continue to support prices as spring approaches.

Starting Monday, CME livestock trading hours will be shorted (and made the same each day) to condense liquidity. Electronic trade hours will be 8:30 am – 1:05 pm CT with open outcry ending at 1:02 pm.

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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