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Closing Comments

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Closing Comments

Obama in Cuba, stocks/dollar/crude higher, wheat fears freeze and Monsanto shows interest in Bayer’s crop science unit.

Corn

Corn short covering continues on supportive export inspections.
Colder than expected temperatures in the western Plains support wheat today, in turn helping corn – but the continued large fund short position (despite last week’s short covering) continues to support corn price as corn planting delays in the south, export inspections pick up and the March 31 planting intentions report nears.
USDA reported export inspections for the week ending the 17th in corn at 39.906 mln bushels. Toping trade expectations and coming in at the best of the marketing year. This is 24% above last week’s number and puts the pace just over -18% off from last year.
Technically corn performed positively today by putting in an “outside” day after trading below Friday’s low and trading above Friday’s high – and closing above Friday’s open/close range. Tomorrow May will encounter resistance at 3.70 and must prove it can get above 3.73 ½ on a closing basis to indicate more strength to come. Fund short covering is the best support for the market for now.

Soybeans

Soybeans higher on technical buying.
Recent strength in the soybean complex has been primarily driven by the on-going change in the dollar/real relationship, but not so today as the dollar traded slightly higher and the Brazilian currency slightly lower.
Support was offered by news of today’s port worker strike in Brazil, stronger soy meal and soy oil trade and better cash markets in the interior.
USDA export inspections came in down from last week nearly -20% at 21.131 mln bu. Leaving the pace for the year off just over -6% from last year.
According to Friday’s COT report, Managed Money is now net long over 21k contracts of soybeans as of last Tuesday. Funds were reportedly buyers of 6,000 contracts of soybeans today.
Soybeans also had an “outside day”, extending the March rally to the highest level since early December. May struggled again at the 200 day moving average but was able to trade above Friday’s high while November was finally able to close above the trendline off Aug and Dec highs.

Wheat

Wheat closes higher on freeze concerns in the Plains, but couldn’t hold early strength into the close.
With the thermometer over the weekend dipping deeper than expected in the western Plains, up to 20 percent of the HRS acreage is at risk of damage for any crop in the jointing stage. The full extent of the damage will be known in a few days – but the market is reluctant to buy into too much damage, knowing the good conditions of much of the crop as well as carryout supplies will buffer the impact of crop damage.
Export inspections came in at the top end of the expectations at 17.183 mln bu. 15% better than last year but around -12% off last year’s pace. Seasonal pace should be for higher now and this week’s inspections were the best since December.
The EU crop monitoring service MARS forecast that the average soft wheat yield in their 28 country bloc would fall 4.8 percent this year to 5.96 tonnes per hectare.
Kansas City has led the rally today on the frost concerns, gaining 2 cents on both Chicago and Minneapolis. For the May contract in Kansas City, taking out last week’s high should give a shot at 5.10 for the next target.

Livestock

Meats lower across the board on a shortened slaughter week and weakness following the Cattle on Feed report Friday.
The overbought condition of the charts in cattle and feeders coupled with the slightly bearish Cattle on Feed report Friday sent live cattle and feeder futures lower to start the shortened trade week. Placements for February were the highest for the month of February in eight years but the on-feed supply remains relatively tight.
Hogs proved they are not infallible, June took out the gains of the previous seven sessions today after achieving contract highs on Friday. The short slaughter week has packers stepping back.

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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