The fireworks in the trade today were sparked by continued move in global currencies following the Fed comments yesterday on backing off on the interest rate hike pace for this year. The dollar started and stayed sharply lower today – lifting currencies abroad including Brazil real, Aussie dollar, Canadian dollar and the Euro. This helped boost commodities across the board, and while energies were able to hold onto their gains – grains lost ground as the day went on, especially in selling pressure in the wheat complex.
Corn runs into resistance and closes mixed on profit taking.
Early action had corn into new highs on this recent rally on the weakness in the US dollar and supportive export sales, but ample supplies and pressure from wheat brought corn back to its recent trading range, leaving May higher ¼ and July lower ¼.
Weekly exports for corn were a respectable 48.3 mln bu – topping the range of expectations.
Argentina’s offering of corn at $5/mt below the US for May/June continues to cap ongoing competitiveness for export markets on extended rallies.
May wasn’t able to press through trendline resistance today but is maintaining its trade above the 50 moving average. The market is overbought and may be subject to consolidation trade for a bit now, but the large fund short position should offer support to price for now.
Soybeans close higher on the day but well off highs on farmer selling.
The currency exchange dynamics helped to support the soybean market the most today on hope for a spur in demand for US supplies on more competitive offerings.
Soy oil continues to be the brightest spot in the complex as global veg oil and energy prices continue price support.
Talk of not only the meal cargo planned for North Carolina the end of this month, but another to follow continues to weigh on the prospect of soy meal price strength.
Weekly export sales had soybean come in at expectations, as 22.9 mln bu.
Technically the May contract stopped and reversed this morning at the 200 day moving average. It closed in the bottom half of today’s trade range, a bearish sign, and the stochastics are overbought and threatening to cross for lower. November held up better and continues with now its sixth day above the 200 day moving average, but today’s high of 9.15 will offer resistance for now.
Wheat collapses on easing weather worries and technical selling after their recent rally.
Updated longer term models from the US Climate Prediction Center showed less-cold and above-normal precipitation for the southern Plains where dry conditions have been building which led to selling pressure and sell stops being triggered. The weakness was compounded by the weakness in European wheat futures.
Global wheat prices simply haven’t been able to keep up with the domestic rally in wheat and the weakness in the US dollar today couldn’t help overcome the selling pressure and continued bearish fundamentals.
Weekly exports for week came in at 7.6 mln bu of wheat, below expectations.
Strategie Grains raised its forecast of 2016 soft wheat crop in the EU to 143.6 mln tonnes, compared to their February estimate of 143.6 mln.
Funds were reportedly sellers of 5,000 Chicago wheat contracts.
Chicago May needs to prove it can find support at or above 4.57. It closed today at 4.62 ½.
Cattle weaker on profit taking and concern over tomorrow’s Cattle on Feed report.
Packers in TX and KS bid $137 per cwt for cash cattle, $1 less than last week’s sales. While tighter supplies, grilling demand and finally profitable packer margins have fueled higher cash expectations – the fear of a pull back in beef cutout values and a bearish COF report tomorrow kept prices in check today.
Morning wholesale choice increased 21 cents per cwt to $234.13 while select cuts declined 84 cents to $222.84.
Hogs were steady to firm as speculative buying offset the bearish side of the fundamentals. Wholesale pork fell 64 cents per cwt to $76.17 while cash hog prices in IA/MN dropped 61 cents per cwt to $63.01.
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.