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Closing Comments


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Closing Comments

Corn was in a blasé mood today, partly based on rumors that Mexico is buying Argentine corn for summer shipment and reports of Brazil and Argentina’s exports totaling 56.5 MMT, which is 20.6 MMT higher than last year (not to mention record predicted South American yields).  May futures poked down into new territory at 3.61, finishing the session -3 ¼.  On a positive note, USDA corn shipments were announced this morning for the week ending March 9th, with corn over expectations at 1.547 MMT vs. 1.450 MMT.  Informa released their 2017 corn planted acreage estimate at 90.8 million acres, which is higher than other estimates of 90 million acres.  The big looming question is – Will the March 31st planting intentions report confirm what has long been suspected?


Soybeans closed out last week down 31 cents, not getting any help from the bearish USDA report.  Futures traded both sides of unchanged today, – ½ (May) at 10.06.  Speculative length was larger than expected coming into this week.  Informa released their acreage estimate of 2017 soybean planted acres at 88.7 million acres.  On the export front, the week got off to a good start with a USDA reported private sale of 120K MT to “unknown” destinations for 2017/18.  This was followed by the announcement that USDA soybean shipments were right in line with expectations, coming in at 656,288 MT compared to expectations of 650K MT (but significantly lower than last week).  It is rumored that China may be shifting as many as 8 million corn acres to soybeans.  Although their demand continues to climb, this could cut into export business with key trading partners such as the US.  Looking at South America, AgRural is projecting the Brazilian soybean crop to be 56% harvested, which is well ahead of the average of 47% for this time of year.  Mato Grosso is 88% harvested.  The 10.00 zone a critical area for May beans.


Wheat has closed down five consecutive days, its most recent casualty being the 100-day moving average, -10 (Chicago May).  Kansas City and Minneapolis followed suit, down -12 ½ and -7 ½ respectively.  Informa pegged all 2017 planted wheat acres in the US at 45.6 million acres, which is in the neighborhood with other predictions.  Wheat rounded out the USDA inspections for the week (ending March 9th) right in line also, showing 519,127 MT vs. the expected 500K MT.  In the Black Sea region, Ukraine is reporting their winter wheat crop at 83% good/satisfactory condition vs. 70% at this time last year.  And, Russia is touting 1.94 MMT of wheat exports in January vs. 1.32 last year, according to their latest official release.  The southern plains are predicated to get rain over the next 6-10+ days, which helped to trigger negative sentiment.  Look for wheat to continue to seek direction from corn and beans.


Live Cattle had a solid start but an uninspired finish, with April trading up to 117.750, +.150.  Increasing beef prices and tighter supplies are lending support to packer margins along with futures’ discounts to recent cash prices.  USDA boxed beef cut-out values were up well over $4 on Friday, the highest since last June.  Today is the final day that CME livestock funds that track the Standard & Poor’s Goldman Sachs Commodity Index will roll their long April positions (mostly into June).  Feeder cattle were also propelled higher on follow through buying and live cattle futures gains.


Hogs arrived this week oversold and looking for a Monday rebound – and get it they did, as April jumped up to 70.225, +2.050, followed by June +1.825.  The pork cut-out is providing short-term spark to the market, along with short-covering and technical buying.  The market has been showing volatility and it is likely to continue.  China imported 25.9 million lbs. of pork in January, which was their lowest monthly total in a year; however, there is talk of the potential of increased buying from the PRC.  Supplies continue to be high and production is expected to be up 6% in the 2nd quarter.


The Commitment of Traders report released Friday afternoon showed funds are net long 80K corn, 128K soybeans, 61.5K soybean meal, 26.4K soybean oil, 35.1K KC wheat and 8K MPLS wheat.  Coming in short 63.2K contracts was CBOT wheat.  In Other news, according to media reports, President Trump is planning to host Chinese President Xi Jinping in early April at his Mar-a-Lago resort in Florida, as he seeks to smooth relations with the PRC.  This will be followed closely by the business community, and Ag in particular. 


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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