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Closing Comments


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Closing Comments

The US dollar rallied back above support after being down sharply this morning.  Threats of a possible bottom put the grains and fund managers back into profit taking mode from recent rallies.  There were certainly some fundamental reasons for the liquidation in grains like the wheat tour prospects and an open planting window before more chances of rain that one could point to today.

CBOT floor brokers estimate that funds have sold 7,200 contracts of soybeans, 4,900 contracts of soymeal and 4,300 contracts of soyoil. In the grains, funds have sold 20,300 contracts of corn and 7,200 contracts of wheat. The fund grain selling has been sizeable.  

Corn did not seem to catch much market chatter today as most of the focus stemmed from wheat crop prospects and possible high being put in place in soybeans.  Certainly the prospect of getting a few more days of planting in ahead of some weekend rains, if it rains, builds the perception of securing more corn acres and off to a great start in growing a trend line yield.  However, wheat and soybeans down being the main reason for today’s loss.

Soybeans posted a new high in the early a.m. and for the most recent move off of soymeal strength, but ran into the fund liquidation to put pressure on throughout the day.  Soymeal is still the one to watch in the complex and a seasonal top in soybeans cannot be confirmed yet.  South America crops are still a concern and kept the selloff in check.  Informa released their projected 2016 Brazilian soybean crop at 100.1 MMTs, the Brazilian total corn crop at 81 MMTs, the Argentine soybean crop at 55 MMTs and the Argentine corn crop at 27.5 MMTs. The Argentine soy crop came in below trade estimates that range from 56-58 MMTs

Wheat was lower again today in league with the other grain markets, but also with a little more reason other than the US dollar rally. The US Wheat Crop Quality Tour is reporting positive feedback with high yield potential and harvest only 3-5 weeks away. Also, Informa had pegged the 2016 US winter wheat crop at 1,405 Mil Bu, up 28 Mil Bu from last year. Their previous estimate was 1,377 Mil Bu. With normal weather, the US has the chance to produce a ’16 wheat crop that is close to last year’s 2,050 Mil Bu. Such a crop would push stocks above 1.1 Billion Bushels.

Cattle and feeder cattle were higher, helped by the cheaper grain prices.  Cattle in general, will have at least a little more room to rally off of lows before they would change the downtrend.  Meaning expect a little more upside especially if grains move sideways to lower for the near term.

Hogs traded higher as the deferred contracts posted new highs for the year and nearby contracts were closing in on the most recent swing high of March.  Dealers are forecasting a roughly 75k-head Saturday slaughter, which will include a packing plant making up down time after it closed two days last week.  USDA estimated last Saturday’s hog slaughter at 60,000 head.

Closing Market Snapshot



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