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Closing Comments

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Closing Comments

Corn traded lower most of the day session, closing Mar -1’4 (364’0). The USDA Outlook Forum gave us more of their mindset this morning, as they estimate 2017/18 corn production at 14.065 billion bushels (15.148 last year), yield at 170.7 bushels/acre, ending stocks at 2.215 billion bushels (2.32 last year). Reminder though that their Outlook does not include any farmer surveys. USDA export numbers released today showed sales at 743,100 MT (net 264,500 MT) compared to expectations of 1.1-1.5 MMT.  Chinese ethanol imports for the month of January were down 94% from last year due to them removing preferential tariffs on US and Brazilian ethanol. First notice day is Tuesday for the March contract. In the charts, to maintain the uptrend the May contract needs to hold above the 3.63 swing low (today closed 3.70’6). Upside resistance in May will be in the 3.87-3.90 zone.

 

Soybeans closed Mar +0’4 (1013’4), halting the streak of red closes for now. The USDA Outlook Forum had soybean production is pegged at 4.180 billion bushels (4.307 last year), a yield of 48 bushels/acre (52.1 last year), crush 1.945 billion bushels (1.950 last year), exports of 2.125 billion bushels (2.100 last year), and ending stocks unchanged at 420 million bushels.  The USDA export sales announced this morning showed 413,600 MT (net 28,700 MT) vs expectations of 750K -1.2 MMT.  There were no new sales announced this morning, and it has been 10 days since the last one.  Today, March options expire with beans featuring the two largest open strikes at 10.20 and 10.00 puts. May soybeans have moved into an oversold condition on the charts. Next week will need to hold above 10.12 on a closing basis.

 

Wheat, like corn, traded lower today Chi Mar -6’6 (431’2). Wheat exports announced by the USDA today were strong, showing sales at 451,300 MT (net 256,500) vs expectations of 300K-600K MT.  The wheat complex needs a constant flow of fresh news to keep it motivated.  Some conflicting forces on the market include the USDA Outlook Forum’s rather uninfluential numbers, IGC news that import demand will be down from several countries including Algeria, Egypt, and Morocco, disappointing EU weekly sales, chatter again of dry conditions across the southern Plains, and strong US weekly export sales.  Buyers this past week included Japan, Algeria, Mexico, Sri Lanka, Peru and the Philippines.  Look for wheat to follow corn and beans direction.  March options expire at the close of business today.

 

Live Cattle where higher in Feb +0.675 (123.750) but lost ground in the deferred months. The Cattle on Feed report this afternoon lacked any surprises: On-Feed 101% (est 100.7%), Placements 111% (est 111.1%) and Marketed 110% (est 109.8%).  The Cold Storage reports has beef stocks at record high levels for this time of year.  Conversely, there is thought that supplies could remain somewhat tight in the weeks ahead.

 

April Hogs bounced back today closing +1.450 (68.025). They received some short-term support from the futures discount to cash, which stood at 11.32 cents coming into today’s trade vs. the five year average of 3.15 cents. 

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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