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Closing Comments

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Closing Comments

“Risk on” was the mindset early in the week but was met with “risk off” to finish in the grain market as funds returned as aggressive sellers today.

The Continuous Commodity Index closed the week at 25 week highs, but off its weekly trading range highs from pressure in the grains.

Crude oil, the dollar and the Dow closed higher while NASDAQ and gold lost ground.

Corn

Corn erases weekly gains on a return to selling by the funds following yesterday’s technical action.
Corn rallied this week in sympathy to the strength in soybeans and growing concern over Brazilian second crop weather stress but gave up the gains on liquidation into the weekend.
CFTC info of reportable positions as of Tuesday showed funds have been aggressive in their coverage of their short positions, leaving them net short -30,909 after covering 105,796 contracts.
May gained again on July and all months fell back to come to a rest on support. The market will continue to watch weather development in Brazil’s safrinha corn and planting progress and weather outlook in the US. May finished today at 371 ¾ and should find stability in the 3.68-3.70 zone.

Soybeans

Soybeans succumb to profit taking at week end.
Soybeans sold off following yesterday’s “shooting star” on the daily chart
The CME Group said it would raise margins to trade soybeans and soymeal futures next week, a move that could have contributed to the liquidation.
CFTC info showed funds had added an additional 35,194 contracts in the week ending Tuesday, leaving them net long soybeans of 135,410. They moved their meal position long and slightly reduced their soy oil length.
Funds were estimated sellers of 21,000 contracts today.
May lost to November, helping to correct the recent spread gyrations. The soybean market is up in rare air still at these levels and will be taking its lead from soy meal. The board crush margin finished the week near four month highs as the products continue to hold value relative to soybeans.

Wheat

Chicago wheat posts biggest daily loss in three years on technical selling.
Front month wheat printed the biggest one day decline since March of 2013 on aggressive fund selling after this week’s short covering rally. Funds were estimated to be sellers of 18,000 contracts today.
CFTC data showed Managed Money covered some of their wheat position as of the end of Tuesday, leaving them net short -88,241 after covering 17,922.
Kansas City gained on Chicago for a second day in a row, returning the July contracts to par. Today’s steep losses erased this week’s gains and left July closing just above the 50 day moving average. The 50 day has started pointing higher for the first time in five months.

Livestock

Pre-Cattle on Feed report jitters had cattle futures into new contract lows and weakness in beef spilled over to the hog market.
Expectations of bearish Cattle on Feed report had sellers in charge. So far this week packers paid $125 to $128 per cwt for cash cattle compared to $133 to $136 last week. This morning’s wholesale choice beef slipped 22 cents per cwt from Thursday while select lost $1.21.
Profit taking came into the hog futures on weakness in the cattle market and lower pork prices. Friday morning’s wholesale pork price at $78.67 per cwt was $2.19 lower than on Thursday. Midwest hog dealers reported morning hog prices up about $1 from Thursday.
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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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