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Closing Comments


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Closing Comments

Corn has experienced major selling the past month and continued to do so today, showing a loss of – ½ at 3.55 ¾ (May).  Today was the sixth consecutive day in a row of losses, as futures are well below the 100 and 200-bar moving averages.  To put it in perspective, managed funds have basically gone from 100K contracts long to a net short of 120K contracts in a little over a months’ time.  All eyes are focused on the USDA planting intentions report this Friday, which is expected to show farmers will plant 90.9 million acres of corn compared to 94 million acres last year.  The range of acres predicted ranges from 90-92.5 million acres.  USDA weekly inspections were announced this morning showing 1.556 MMT for the week ending March 23rd vs expectations of 1.350 MMT. 


Soybeans cannot find a reason to think higher as they continue to work their way down the chart in anticipation of Friday’s USDA planting intentions report.  Today saw the May contract down for the fourth day in a row, -4 ¼ at 971 ½.  Managed money has been busy selling at a higher than expected rate as of late.  Inspections announced by the USDA were slightly under expectations at 555,012 MT vs. 600K MT.  According to AgRural, the Brazilian soybean harvest is now 68% complete.  Will Friday’s report show US planting intentions above or below 88 million acres?


Wheat also trended lower again today, with Chicago -4 , Kansas City -6 ¾, and Minneapolis -3 ¼.  The Commitment of Traders report on Friday showed large spec is getting close to their record short position of 164K shorts (currently 145K+).  The US is the cheapest wheat option right now and the Dollar is at a four month low, so one would think SRW and friends could pick up additional export sales in the coming days.  Wheat inspections this morning were basically in line with expectations, as the USDA announced 541,799 MT compared to expectations of 550K MT.   Looking ahead to Friday, wheat stocks are estimated to be up 253 million over last year, but wheat acres to be down 3.7 million acres from last year.


Live Cattle slipped out of the gates this week, influenced by declining wholesale beef prices and pressure from outside markets, -1.400 (June).  Supplies are plenteous and this is causing investor concerns related to the potential for falling cash and wholesale beef values.  And, it appears that opportunities may be limited for US beef exports to take advantage of the Brazilian meat saga, as several countries have now lifted bans on Brazilian meats.  The USDA Cattle on Feed report was released Friday afternoon and it was considered “neutral”, with On Feed 100% vs. 100.1% estimated; Placements 99% vs 98.9% estimated; Marketings 104% vs 103.3% estimated.  


Hogs have dropped below key technical support levels as they fell sharply today, -2.225 (June).  Buyers seem to be a bit skittish ahead of the US Hog & Pigs report this Thursday.  However, it is expected that pork exports will continue to be strong, grilling season demand will increase, and Easter ham consumption will absorb some of the plentiful supplies.


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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