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Closing Comments

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Closing Comments

Corn opened soft before firming into the session and then selling off before the close into negative territory. Front line fundamentals continue to be average to favorable with planting pace, G/E ratings, and short-term forecasts all providing headwind to the market. On the positive side money flows, Brazilian safrinha corn issues, and potential for dry hot weather during pollination seems to continue to feed the bulls as this market moves higher. 4.17 held on a closing basis today, but look for a close through here to be the next signal that higher prices will continue.

Soybeans continued their strong start to the month with the July / November spread continuing to invert to a new high of .64 over. For a large range day, headlines were especially sparse, but the spreads could indicate that the primary market driver remains the South American crop, and not our own weather forecasts. Meal was once again the key driver of action, with a near limit move higher despite crush numbers coming in slightly off the March totals. Meal remains the key to the oilseed complex, as strength should still garner respect that highs are not yet in; however, failure with follow-through will be the first indication that we have developed a short or long term top in beans.

Wheat traded higher today, led by concerns over protein content and rain delays in areas of the western Plains. The wheat complex continues to give hopes of a bottoming formation, despite the shocking amount of fund shorts that continue to pile in. These shorts could easily lead to explosive higher action over the coming weeks and months, especially considering wheats seasonal to firm into June / July. While the Chicago / KC wheat spread did its best to recover yesterday, it is still providing headwind to any substantial rally. Just like meal in the bean complex, look for this spread to be one of the first thing that turns if this market is able to mount any substantial rally.

Cattle enjoyed mostly positive trade before selling off late into the day session to close unchanged on the day. Good pasture conditions will be an obstacle to higher movement, as cow-calf operations continue to retain heifers and expand at a steady clip despite slimmer margins than last year. Slaughter today came in at 109k head, down 4k head week on week but unchanged from a year ago. This brings the weekly total up to 336k, much softer than last week with no slaughter on Memorial day.

Hogs surged higher today, closing on their highs despite the selloff in cattle. Slaughter is 436k head, up from yesterday by over 8k head, and over a year ago by 16k head. Most of the strength is being driven by packer’s needing hogs for Saturday slaughtering and needing to offset the slide in the cash market at the beginning of the week to get anything placed.

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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