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Closing Comments

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Closing Comments

Lower US dollar today following the weaker-than-expected economic data released this morning as traders fear a cool-off in the economy.

Corn

Corn manages to close green on continued short covering support.
Cool nearby temperatures are slowing some planting enthusiasm but the expectations for warmth past 10 days has the market expecting good planting progress to open up. Good timing for much of NE, IA, SD, WI who’s first plant date for corn according to the RMA is April 10 & 11. Early planting would help corn development get ahead of La Nina concerns for warm/dry August.
USDA export inspections came in at 38.490 mln bu, just slightly off last week’s pace and puts corn around 9 percent behind the USDA pace.
USDA reported in Kansas that corn planting was underway in southern counties and 2 percent complete compared to the five year average of zero.
Chinese corn futures continue to be heavy on the news from Chinese media that the govt will drop its stockpiling program and move to market based pricing.
Technically May led strength today, closing ½ cent higher and the second close in a row through trendline resistance. Fund short covering should continue to give pricing opportunities for May in the 3.80 to 3.90 area – May closed at 3.70 ½ today.
Thursday’s USDA report is weighing on the market as it expects to be reminded of the plentiful carry-out supplies and the increase in expected acres for ’16. The question that won’t be answered Thursday is how many acres soybeans have gotten back on their 50 cent November rally.

Soybeans

Soybeans close lower on profit taking (only the third time this month) after putting in new highs on the move.
USDA export inspections came in at 20.853 mln bu, just off last week and keeps the pace only about 1 percent behind the USDA pace.
Brazilian real traded higher today, helping the US/Brazil exchange rate.
Soy oil rallied on Malaysian palm oil putting in a two year high on fears of damage from El Nino.
Canola in Canada’s ICE exchange rallied to six week highs on strength from soy oil and improved canola crush margins while the higher Canadian dollar limited gains.
Friday’s CFTC report showed non-commercial traders switched to a net long position in CBOT soybeans of 15,552 contracts.
The market continues to price in concern of lost acres going into the ’16 season as well as fear of August La Nina weather being detrimental to soybean production.

Wheat

Wheat leads strength on continued dryness concerns and the large fund short position in Chicago.
USDA export inspections for wheat was about 30 percent off last week at 12.020 mln bu, which is about 3 percent behind the USDA pace.
Short covering propelled the wheat complex early in the session as the eastern production regions are concerned over the coming Midwest ‘polar vortex’ while dryness in the west continues production concerns.
Crop Progress and Conditions in KS showed 56% G/E which is a drop of 1 percent from last week. Winter Wheat jointing in KS was at 30 percent, ahead of 12 percent last year and the five year average of 16 percent.
CFTC data Friday showed that speculators actually increased their ‘short bets’ in wheat as of the end of trade last Tuesday.

Livestock

Cattle mixed and hogs higher following the Hog & Pig report.
Thursday had cattle finally stem their slide. While too soon to tell if the recent rally was the spring high – 3 weeks early – that is a distinct possibility as production begins to outpace year ago levels. Last week’s USDA data showed an increase in carcass weight (+4 lb) which is the third consecutive week for higher weights.
Last week cash cattle traded $136 which was off $3 for the week. This morning boxed beef traded higher with choice up 1.12 and select up 1.94.
Hogs ended last week under long liquidation ahead of Friday’s USDA Hog & Pig report, however the market fears weren’t realized as the Hog & Pig numbers came in at basically 100 percent of a year ago vs the trade expectations of 100.3 to 100.6. The take-away from the report is that inventories will remain close to a year ago through the summer, but there seems to be a moderation to the longer term expansion trend.
This morning Peoria hogs traded $2 higher at $40.

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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