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Closing Comments

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Closing Comments

US unemployment gains grew in February, additional sign of labor strength which could further ease US economic fears and allow the Fed the latitude to gradually raise interest rates this year.

The general commodity complex responded well to the jobs report as crude oil traded more than a dollar higher for most of today’s session – close to challenging highs from the end of January.

Former Brazilian President da Silva was briefly detained for questioning in a federal investigation of political corruption – adding to the crisis threatening to topple his successor Dilma Rousseff.

Corn

Corn closes higher on short covering (for third day in a row) but off its daily highs. May lost 1 ¼ for the week.
Corn started the day strong, but waned as it followed wheat’s lead – however it was able to regather itself into the close to muster essentially an unchanged week.
European maize futures had a large range trade day, putting in new lows but proceeded to run out of sellers and close back close to the open. According to the farm office FranceAgriMer, 94 percent of soft wheat there is in good or excellent condition – unchanged from the previous week but above 91 percent a year earlier.
Next Wednesday the USDA will release their monthly supply and demand report. Traders are expecting an incremental increase to 1.85 bln bu carry out vs last month’s 1.81 bln.
CFTC data this afternoon showed Managed Money as of the end of Tuesday took their short position to a new record net short of -203,837 after adding more then -69k net shorts. This size of short position should provide trade support to start the week.

Soybeans

Soybeans had their biggest day in 11 weeks on short-covering sparked by strength in Brazilian currency.
Soybeans, and more particularly soybean meal, posted their most impressive day of the year off short covering and concerns that the strength of the Brazilian real vs the US dollar could have importers shifting destinations back to the US.
Some rains in Brazil which could hamper movement of crops for exports added to the bullish flavor.
Brazil soybean crop is estimated at 41 percent harvested, in line with last year and ahead of the five year average of 39 percent.
The US attache in Argentina left recent estimates for oilseeds unchanged, but noted that excessive rain and heat levels in various areas of the country could lead to damage resulting in yield and area loss.
Cash offer for US soymeal via rail were firmer today with the truck market left unchanged. Processors have cut down the crush pace, keeping supplies tight.
According to the CFTC Commitment of Traders report this afternoon, Managed Money was aggressive sellers of soybeans through Tuesday. Adding -59k contracts of net short positions in soybeans, taking them to a net position of -81,458.
Funds reportedly bought 11,000 contracts of soybeans today.

Wheat

Wheat higher for the third day, led by Kansas City, on short covering off developing weather concerns.
Wheat started the day strong on short covering from dryness concerns in the southern US Plains, wetness concerns in the soft wheat regions and fear that the early break of dormancy could have the crop set for damage if a cold front develops. A growing portion of Oklahoma – the number 3 winter wheat state – is now in the drought monitor as “abnormally dry”.
Signs of labor growth in the labor market added to support in the general commodity complex.
European wheat futures were back into new lows today as the French supplies continue to seek buyers for current supplies ahead of the coming new crop harvest.
For the week, CBOT wheat rose 8 ½ in May, KC picked up 14 ½ in May while Minneapolis participated up 7 ¾.

Livestock

Cattle, feeders and hogs all higher to finish the week.
Boxed beef cutout values were firm to higher on moderate demand. Choice was $1.22 higher to $220.97 per cwt with Select up $0.35 to $211.99 per cwt.
The USDA attache to Argentina noted that beef exports in 2016 are forecast to be the highest since 2011 as a result of the recent policy changes implemented to improve export competitiveness.
Cash hog prices in the Midwest were consistent with Thursday’s sales with packers cautious about cutting cash bids. Peoria hogs were steady at $37 on active trading.

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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