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Closing Comments

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Closing Comments

Profit taking came into the grain markets today following yesterday’s bullish USDA soybean report. Funds were reportedly sellers of 7,500 corn, 9,000 soybean and 2,000 wheat today.

Energy markets were higher on the EIA report showing better drawdown in inventories than expected. Crude inventories were down -3.4 mln, gasoline -1.2 lower and distillates off -1.7 mln. Usage has been good leading to good disappearance while ethanol featured both a jump in production and a large draw on inventory – stocks now at a five month low.

Brazil’s Senate is set to vote on President Rousseff’s impeachment today as the supreme court rejected her last minute appeal. The Brazilian currency is trading back to its recent highs.

Corn lower as the market absorbs yesterday’s bearish carryout numbers and continues to debate how many acres have actually switched to soybeans and the weight of the wheat markets. While new crop markets were lower today, new soybeans managed to put in another new high in the soybean/corn ratio with the new crop contracts trading at over 2.76 ratio – the highest new crop contract ratios have traded since the summer of 2014 when it reached 2.98.  

Soybean back-filled following yesterday’s bullish USDA report on profit taking following yesterday’s 5 percent surge. The smaller than anticipated ending stocks forecast continued though to underpin the market. Basis at the gulf and interior steady to weaker following yesterday’s rally as buyers have stepped back for now. Brazil’s Aboive cut its forecast for the country’s near. The soy oil market continues to be active in export as the USDA announced the third soy oil sale in two days.

Wheat lower on the day on the upcoming US harvest and ample supplies. Yesterday’s bearish USDA world stocks report showed a bulging 257 mln tonnes – but when you remove China from the mix, a year over year loss of 7 mln tonnes is revealed. This would suggest the actual trade participant’s carryout is in reality smaller than in 09/10, 11/12 and 14/15. FranceAgriMer cut its forecast for French wheat stocks to 3.9 mln tonnes off last month’s 5.45 mln estimate on improved export activity. The KC contract reached its lowest level in 10 years after taking out the 2007 low at 433 ½.

Cattle and feeders traded lower today despite the morning jump in boxed beef as futures consolidation continues after the recent 9 dollar rally.  

Hogs higher on a boost from rising wholesale pork prices and firmness in the cash hog market. The trade is look for additional signals the China would continue to import US supplies in light of the high Asian prices for pork. USDA will release pork export data Thursday. Hog weights remain above year ago levels, but continue to fall signaling producers are current with their marketings.

 

CWG latest 15 day summary for major crop regions:

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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