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Closing Comments

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Closing Comments

One word for today in grains and oilseeds; wow. Huge amounts of money continue to flow around the commodity world with soybeans posting record open interest and volume again today.

Uneventful weekly EIA showed a small crude build and was offset by drawdown in the products. Ethanol was in line with expectations showing better production and a small drawdown in stocks.

Corn

Corn to 6 ½ month highs on fund short covering. Dec closed above 4.00 for the first time since Dec 4th.
May corn surpassed its December highs without much hesitation today on fund buying, technical buying on a ‘risk on’ mentality as money is moving out of ‘sold’ positions in corn and wheat. Dry conditions in Brazil continue to concern the supply side and are providing some opportunity for US corn to Brazil.
Consider this; we have traded 14 session in the month of May – only one of those have closed lower for corn. May has in the past six sessions cleared its March highs, Feb highs and Dec highs. May will be next running into continuation resistance at 4.00 and May swing highs at 4.16. For now the funds are running.

Soybeans

Soybeans now above $10 on fund buying and ongoing Argentina concerns.
May soybeans sped past the psychological $10 mark to reach levels not seen since July of last summer on record breaking fund buying activity. Record daily volume and record open interest are the feature as speculative money step over each other to press the market higher.
Soybean meal helped fuel the fire on the biggest day of recent memory and working on the biggest week since 2014.
While yes Argentina is a story because of wet weather and there is growing concern over potential impact of La Nina in the US for late summer. Regardless, this rally seems to be fully now about money movement and buying begetting more buying – much like a forest fire can create its own wind. So, where next? May closed at 10.09 ¼ today – strong resistance should be present in this 10.00 to 10.20 zone but markets like this are precise at tops or bottoms. If 10.20ish doesn’t stop it – 11.00 is the next real target zone.
The most impressive chart in the soy complex today is the May/Nov spread chart. Since last October November has been gaining on May – today May gained 20 ½ cents vs November – wiping out the entire move from October.

Wheat

Wheat short covering propels Chicago wheat above $5 for the first time since November.
The general money flow into commodity ownership and the larger than expected short fund position had speculators abandoning their short positions in the wheat complex.
Bearish fundamentals globally really haven’t changed although there is some chatter about dry Australia.
July Chicago was up 18, July Kansas City up 16 ½ and September Minneapolis up 12 ¾.

Livestock

Cattle lower for 8th straight day on continued long liquidation, hogs higher on better wholesale pork.
April and June live cattle sank to four month lows on bear spreading where traders were selling nearby months and buying deferred months on anticipation of lower or steady cash cattle prices later this week.
This morning wholesale choice beef price was up 27 cents per cwt while select gained 25 cents. Higher corn futures and lower cash feeders weighed on the feeder cattle futures.
Technical and speculator buying supported hogs for the fifth session. Whole sale pork price was up 40 cents or $3.23 from a week ago. Cash prices are holding firm across the Midwest despite the large slaughter numbers as weights have continued to come down.

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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