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Closing Comments


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Closing Comments

May Corn continued yesterday’s afternoon session break to the downside, finishing 3.75’4, –5 ½ and 3.94’2 Dec, -4 ¾.  The focus seems to be on profit taking – will we see any follow through next week?  From a technical standpoint, the hook reversal with continued selling in the overnight to confirm a high is not a positive sign.  Corn entered today overbought, with a net long position estimated at 31K contracts, and with a big supply to absorb.  In export news, Japan continued to rebuild its low corn inventories today, as the USDA reported a private sale to them of 194,112 MT of corn, with about a third for 2016/17 and the rest for 2017/18.  Look for resistance at 3.83’2 and nearby support at 3.72’6 and 3.68’2 in the May.


May Soybeans continued to shed recent length down to 10.43’2, -11 ½.  Soybeans have been battling the bears in broad range trade, and it looks like they may be starting to succumb to weakness from positive South American weather and yield reports, rumors of significantly planted acres this spring, and overnight bird flu demand issues in China, etc.  Will long liquidation selling continue into next week?  Keep an eye on key support levels in the 10.30’4 and 10.12’6 areas in the May contract.


March Wheat could not build positive momentum today, with Chicago’s soft red winter coming in at 4.41’0, down -6 ¾.  KC and Minneapolis also posted losses on the board.  Wheat is overbought, showing signs of a short-term peak in place.  Wheat has seen positive export numbers, record low acres of winter wheat plantings, as well as reports of winterkill in some areas of the US and Russia.  However, the burgeoning supplies and stiff competition for global business with an overall strong Dollar, have kept things in check.  Today, traders said that Egypt’s GASC bought 360K MT of Russian, Ukraine and Romanian wheat.  Look for a possible technical correction in the short-term.  Close in support for March wheat is in the areas of 4.38’4 and 4.32’4. 


April Live Cattle easily covered losses from the last two sessions, +1.675.  According to traders, the market was sparked by short-covering and futures’ discounts to initial cash prices.  Coming into today’s session, April cattle was as at $6 discount to last week’s cash compared to the five year average of $1.40.  Live cattle’s change in direction also helped buoy feeder cattle, as they were up, +.250 (April).  Watch the potential impact next week of ample supplies, poor packer profits and spotty wholesale beef demand.


Hogs were also able to regain some of yesterday’s losses on short-covering, +.950 (April).  The cash market needs news to feed its advances, i.e. continued climbing pork belly prices or positive export opportunities.  It appears that there is a potential shift of US exports to China from Mexico, as China continues to exhibit an insatiable appetite for pork (as well as beans).  Once again, it is worth mentioning, that trade policies and agreements from the new Presidential Administration will be key.  As the new Cabinet members are confirmed and firmly in place, hopefully uncertainty will be less of a market influencer.


In Other news, the Senate confirmed Scott Pruitt to head the EPA, with the vote aligning mostly along party lines.  Stay tuned for future direction, as concerns voiced by the Ag industry center around ethanol policy and how the new Administration will balance its loyalties to oil and agriculture.


The markets will be closed Monday, in observance of President’s Day.

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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