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Closing Comments

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Closing Comments

Weekly EIA petroleum and ethanol inventory report was a little bearish. Crude inventories jumped 2 mln on the week, gasoline was 1.6 mln better while distillate stocks did see a better-than-expected 1.7 mln distillate draw. Ethanol came in at expectation with a modest decline in both production and stocks.

 

FOMC policy comments kept Fed Fund rates unchanged as expected and noted survey measures of inflation of inflation have changed very little. Economic activity has appeared slow despite improvements in the labor markets.

Corn

Corn closed lower on a return to selling by funds but off session lows.

Corn continues to be pulled between strength in the soybean market and weakness in wheat. Wet weather has sidelined planting progress for now in many areas of the Midwest but good planting progress and decent outlook should abate too much planting delay fears.

Forecasts in Brazil show some upcoming relief to parched areas, but losses from recent dry weather have already reduced the output of the second crop.

Funds were reportedly sellers of 7,500 contracts.

Soybeans

Soybeans recover early losses on continued South American uncertainty and export sales announcement.

Soybeans came from early losses to close higher on old crop contracts on continued concern over the hit the Argentine crop has taken from heavy rains – already the Buenos Aires Grains Exchange has dropped its 15/16 soy crop estimate to 56 mln tonnes from a previous forecast of 60 mln tonnes.

A third of Argentina’s soy farms remain swamped after the early April storms, with crop loss estimates at 5 mln tonnes. Comments from many producers focus on the fact that they have never seen this amount of rain in such a short amount of time during harvest. Argentina is the world’s top exporter of soymeal and third largest supplier of raw soybeans.

Signs of some better business were noted with the USDA announced this morning that US exporters sold 393,000 tonnes of soybeans to unknown destinations. This was the first US old crop sale to a buyer other than Mexico in more than a month.

May board crush margin traded lower for the fifth day in a row off lower soybean oil futures. There was some notable long meal / short soy oil spreading today.

Trade expects tomorrow’s export sales for old crop at 400,000 to 600,000, close to 407,740 a week earlier.

Wheat

Wheat lower on profit taking.

Cooperative weather for hard red wheat areas weighed on wheat and the bearish sentiment brought selling back into Chicago.

Expectations for tomorrow’s weekly export report have expectations for old crop wheat sales of 75,000 to 175,000 tonnes, down from 295,075 a week earlier.

Livestock

Cattle close lower but off lows, lean hogs higher.

Cattle futures settled lower today after poor wholesale beef demand brought back the trade expectations for weak cash prices later this week. However, bargain hunting helped lift prices off the daily lows. April live cattle will expire Friday.

This morning’s wholesale choice beef price fell $2.68 per cwt from Tuesday and select was off $2.71.

Technical buying and upward-trending wholesale pork prices sent lean hogs higher. Wholesale pork values gained for a sixth straight session this morning with price at $82.93 per cwt, up $1.11 cents from Tuesday.

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.

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