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Closing Comments

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Closing Comments

Hedge funds appear to be in buy mode in the energy market for now. While it hasn’t rallied strongly, the market was able to shrug off yesterday’s bearish inventory report.

Lower US dollar provided some support to the commodity complex today. Competing currencies including the Canadian dollar, Brazil real and Russian ruble were all higher.

Corn

Corn closes incrementally higher after sellers are unable to press past 7 week lows.
New lows were able to be found in several contracts from July on, but sellers couldn’t keep up the momentum as nearly all corn contracts close in the green thanks to help from the wheat complex.
USDA weekly export sales came in above the highest estimate at 12.7 mln bushels.
Buenos Aires Grain Exchange kept its 15/16 Argentine corn crop output estimate at 25 mln mt.
Generally the corn market is plagued with slow news and a wait-and-see trade as the market prepares for the March 31 Prospective Planting and works on weather pattern prognostications.

Soybeans

Soybeans edge higher on bargain hunting and technical buying.
Soybean export sales this week came in at expectation at 16.2 mln bushels.
Soy meal was able to incrementally extend yesterday’s gains but has yet to prove it can take out any previous swing highs to indicate a potential bottoming of the multi-month slide. Soybeans are watching for meal’s action to find support.
South American harvest progress and ample global supplies continue to weigh on potential rallies.
Some support for US soybeans may come from the currency exchange part of the equation. The Brazilian real rallied to its highest level since the end of December – the dollar/real is now at the most favorable position to the US since the end of August. .

Wheat

Wheat was the feature today on short covering and weather concerns.
Chicago wheat climbed to at 1 ½ week high on concerns developing in the southern Plains over developing dryness as well as pending wet weather continuing to plague the soft wheat production areas.
As we have talked about, the funds are record large short in their positions in KC and Chicago wheat – setting them up for potential short covering rallies.
USDA export sales came in about where the market was planning at 12.7 mln bushels.
Millers in India have made their first international wheat purchase of the year. A potential sign of further demand as they quantify the reduced production from drought issues in their wheat producing areas.
Funds reportedly bought 6,000 wheat contracts in Chicago.

Livestock

Live cattle lower on profit taking while Hogs recover from early losses.
Cattle futures closed lower from profit taking and lagging optimism for cash price. Packers are sticking with their $136 bids while offers are holding above $140. Last week cattle moved in the Plains between $133 and 137. Wholesale choice dropped 28 cents per cwt and Select was down 76 cents.
Hogs recovered early session losses, closing close to the open on technical buying but soft cash hog and wholesale pork values are weighing on deferred months. Average cash hog price in the Midwest shed 76 cents per cwt while wholesale pork declined 33 cents per cwt.
USDA this week released a formal repeal of its “COOL” labeling regulations in order to comply with the WTO decision against the requirement.

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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