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Closing Comments

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Closing Comments

Corn found good support during daylight trade thanks to continued fund buying compensating for the farmer hedging. March closed +1. Growing open interest is indicating good outside interest in owning corn as spring/summer approaches. Friday’s CFTC report showed Managed Money net long 29k of corn – not a huge number but the largest net long since July 5th. Today’s inspections reinforced the demand story, coming in above trade expectations at 49.4 mln bu.; the largest weekly inspection since October. This puts cumulative weekly exports 77% above last year’s pace but there is still work to do to hit the USDA projection. March corn is now solidly into a zone (3.74-3.78) where it will continue find farmer selling of old crop supplies. Upside extension targets in the March contract include 3.89 and 3.98.  

 

Soybeans recovered early session weakness on support from soy meal but couldn’t stay green into the close. Soybeans closed -4 ¾ (Mar). Weekly inspections were close to the lower end of expectations as Brazil’s early harvest works its way into the export stream. Current export pace is 15.5% above last year at this time. Brazil’s ABIOVE bumped their soy crop expectation to 104.6 mln mt which is above the USDA 104 mln estimate. Currency trade has held Brazilian farmers back from being big sellers despite the large incoming crop while the first round of selling of new crop by US farmers is already off the table. March soybeans are still in a mode of ‘higher highs’ and would eye the 10.90-11.10 area if buying can continue.

 

Wheat found support today with Chicago +3 ¼ (Mar) and KC +5 ¾ (Mar). Export inspections were disappointing at 11.3 mln bu but the pace is still 51% ahead of last year. ABARES noted the Australian wheat crop will come in easily at a new record of 35.1 mln mt. The previous record was 29.2 mln. Last week’s USDA report seems to be continuing to be supportive thanks to the pace of hard wheat exports while US winter wheats are monitoring the threat of breaking dormancy too early.

 

Live Cattle were lower -0.475 (Feb). Cattle prices continue to struggle on signs of weak domestic demand and abundant supplies. The larger than expected Cattle on Feed report Placements continues to weigh most heavily on deferred month contracts.

 

Hogs expired February +0.200 today as deferred months lose ground -1.375 (Apr). Tighter pork supplies – specifically plunging pork belly supplies – continue to support packer margins. Pork bellies supplies are currently at the lowest level since records began in 1957.

 

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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