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Closing Comments

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Closing Comments

Corn had a volatile day of two-sided trade, as today’s WASDE supply and demand report provided minimal surprises on the corn front. An early typo showing corn production down nearly 800 million bushels caused high frequency traders to push the market nearly .10 higher, only to have it corrected, causing the market to crash back lower to negative territory within minutes of the report. Both 2015-2016 and 2016-17 corn carry out dropped below expectations to 1.708 bb and 2.008 bb respectively. While these numbers are below expectations, they still show ample supply moving forward with higher action driven more by forecasts than by the balance sheet.

Soybeans traded mainly higher today, buoyed by a smaller than expected soybean carryout number for the 16/17 crop that is nearing the precarious 250 mb carryout mark. Historically, supplies for beans under 250 mb are viewed as tight, over 250 mb as ample. Since the March 31st report, expected carryout of soybeans has dropped 140 mb, from expectations of another ample crop to end with 400 mb of beans, all the way down to just 260 mb carryout projected. Despite the friendliness of these numbers, beans still traded up .30 to down -.06, and closing up .10 within the session.

Wheat never seems to fair well on USDA report days, and today was no different. Larger than expected new crop stocks, as well as production on all classes of domestic wheat pressured wheat from positive territory moments after the report to down .15 by the closing bell. Yield expectations seem sky high for the crop about to be harvested, with quality the only seeming concern going forward. That being said, wheat remains the powder keg of the grain complex with fund shorts continuing to pile on at these low prices.

Cattle traded negatively today despite briefly firming in expectation of the 11 A.M. WASDE report. Slaughter numbers for the week beat out both yoy and monthly comparisons at 559k head. Both choice and select were stronger mid-day with choice up .13 to 226.98 and select up .88 to 203.72.

Hogs continued to retain strength in the deferreds, though nearby continues to soften up and look rather toppy. Lean index values trade between 79.02 – 79.76, with cash continuing to lag the surging futures market. Despite the speed of ascent we could see nearby support hold and poise for a potential leg higher, but any kind of a sizable set back would negate the higher read.

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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