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Closing Comments

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Closing Comments

Corn

Corn higher on short covering and strength in wheat.
Corn starts off the week with a mini-gap left behind on the charts, and left unfilled throughout the day gives it some positive momentum. Most news seen today was tying the rally back to the new record short position by managed money. The Commitment of Traders showed contracts at 236,201 contracts for corn on Friday.
Export shipments were within the range of expectations coming in at 805k mmt, continuing to slowly trim the gap between current pace and USDA expectations. To date exporters are still 139 million bushels short of USDA corn export pace when seasonally adjusted, but up nearly 22 million bushels from the slowest mark set in early February. It is worth noting that this lag was also magnified by soybean export shipments outstripping pace by nearly 162 million bushels!
Fends were estimated buyers of 10,000 corn futures today.

Soybeans

Soybeans held the close from Friday, and still faces a strong trend line for resistance.
Brazilian soybean export commitments for the early part of march are on a very strong pace and last week actively exported beans at the ports, lowering wait times for vessels to load. Meanwhile, Argentina is becoming more aggressive with offers for April and May soybeans as well. The combination may limit much of any new US soy export interest.
The strong US dollar and weaker Brazilian real made a slight correction today, and had been keying the soybean rally over the last couple of weeks. New export business may also be hard to come by if the longer term trend has changed here. Bids at the Gulf did hold steady for today though.

Wheat

Colder Temperatures in the later part of the week and large short position contribute to rally.
No changes in drier areas of the Western Plains into early April and weather models keep backing away from any meaningful rainfall chances for them. Still some concerns over colder temperatures across the western and northern plains toward the end of the week. Possible hard freeze as overnight temperatures could fall to 28 degrees F as far south as Northwest Texas, but also through areas of Oklahoma panhandle and North Central Kansas.
KC Wheat has continued to strengthen over Chicago wheat with some dryness concerns, and colder temperatures forecasted. Chicago wheat may look to pick up some momentum if flooding relief is not seen soon though.
Funds were estimated net buyers of Chicago wheat at 2,500 contracts.

Livestock

Cattle strong on technical buying and anticipation of cooperative spring grilling weather.
The cash cattle market continues to support the current trend seen in the futures market however, the deferred months remain heavily discounted. The discount is seen for two primary reasons, first many cattle owners are hedging cattle following the large losses of the last year as well as most are doubting if the market can rally in late summer when the increase in placements come to market. Nearby cattle closed down .50 points today and is seeing resistance at the 200 bar moving average. Above normal temperatures is also viewed as supportive for demand but will need to continue to improve if cash is going to sustain a further rally into spring.
The hog market feels like it is looking for a short term top with April closing down 1.05 today. The cash markets should see some strength into grilling season this spring but many are questioning if it can last. August futures are trading at a 14 cent premium to cash which is normal for this time of year however this year isn’t expected to be normal. Third quarter production is expected to see an increase of 3.6% above last year and the shift in production from the second quarter to the third is projected to show the biggest increase on record this summer. Last year August hogs were trading at 75.60 with August hogs trading today at 81.30. A nearby break of 3.00-4.00 should be expected from these overvalued levels.

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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