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Closing Comments

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Closing Comments

Corn surges to a new high close on the rally on the first trading day of June and of the third quarter of the year. Continued hope for export demand for US supplies and ongoing concerns over Brazil’s second crop corn buoyed the market.

Brazil’s cereals exporter association Anec cut its estimate for 2016 corn exports to 23 mln tonnes, down -7 mln from its April outlook due to the hot/dry weather.

Analysis Lanworth noted that the drought in Brazil’s second crop corn has affected their satellite imagery estimates of the crop – having them lower their estimate to 74.9 mln tons compared to the USDA’s 81 mln.

Technically the corn charts put in a ‘bullish engulfing’ bar – typically found at the end of a downtrend it also signals the anticipation for follow through action higher. July closed at 4.13 ¾ with the expectation for resistance in the 4.17-4.22 area.

Soybeans found new highs on the run in the July contract after rebounding from early session weakness. The ongoing expectation of persistent demand for US supplies on Argentine production concerns and the comment from Brazil’s Anec that May soy exports fell to 8.69 mln tonnes from the 10.3 mln in April added support.

USDA stated that US processors crushed 4.75 mln tons of soybeans during April, down from 4.99 mln during March. This came in just above analyst estimate of 4.704 mln tons. Soy meal stocks were report at 365,653 tons, up from 302,672 in March.  

Wheat firmed on a weaker US dollar and wet weather on the front end of harvest in the southern US plains and Midwest as well as Germany and France spurred short covering following yesterday’s sell off.  

Cattle continued to find support in the nearby June contract as producers are caught up on marketings and the Memorial Day weekend grilling cleaned up retail supplies. The trade will be watching for signals from the cash trade as the shortened week winds down. Higher corn prices had feeders finish lower, but well off their session lows.

July and August Hogs led the price strength today – partly on the anticipation on a pick-up in export sales to Asia as Chinese pork prices continue to climb as farmers hold back pigs to rebuild herds. The government has released chunks of its frozen reserves but it has had limited affect on price for the world’s largest consumers of pork.

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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