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Closing Comments

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Closing Comments

Corn had a big burst of energy early in the session, but settled in for a modest gain, +3 ½ (May) and +3 ¾ (Dec).  Corn got the better end of the Friday USDA reports, with acreage intentions showing plantings of 90 million acres, down 4 million from last year.  However, March 1 stocks came in much higher than anticipated at 8.6 billion bushels (on-farm stocks are up 13% from a year ago), which put a check on pre-planting euphoria.  With normal growing conditions this summer, it is likely that corn carryout will be reduced by 600+ million bushels, which could lead to .25-.30 cent higher prices – feed buyers beware.  The USDA served up the usual Monday weekly inspection numbers this morning, and they pegged corn at 1.475 MMT for the week ending March 30th, compared to the expected 1.350 MMT.   Weather is now the big topic of discussion.  A question to consider – is negative news already “baked in” or are small rallies bull traps that lead to lower prices?

 

Soybeans experienced a free fall on the heels of Friday’s reports, as farmer planting intentions tallied 89.5 million acres this year compared to 83.4 million last year.  Today continued the negative trend, -7 ¾ (May) and -3 ¾ (Nov).  Soybean planting intentions acres are up in 27 of the 31 states that are showing estimates for 2017.   Compounding the situation, soybean stocks also showed an increase over expectations, up 13% to 1.7 billion bushels.  USDA weekly inspections had soybeans over the expected 600K MT at 620,725 MT.  In the face of bearish fundamentals, demand continues to be good.  The closely watched corn/bean ratio is now 2.42 3/8, continuing its trek below 2.50. 

 

Chicago Wheat chose to follow corn in a positive direction today, although sputtered its way to the finish, +1 ¼ (May).  Results from Kansas City and Minneapolis were not as positive, -1 ½ and -3 ½ respectively.  Wheat supplies continue to bust bins, as all wheat stocks were up 21% over last year at 1.7 billion bushels.  Wheat also made a good showing on the weekly inspection log, with 559,646 MT recorded for the week ending March 30th, compared to expectations of 550K MT.  It has been reported that Turkey is buying from alternative sources to Russia as part of a trade dispute bubbling over from an argument related to the downing of a Russian fighter jet in 2015.  This is significant because Turkey is the world’s biggest exporter of flour, and consumes a large amount of high quality wheat.  Time will tell if this will be a significant shift on the export balance sheets.

 

Live Cattle seems to have optimism on the horizon with strong support and good demand.  However, futures experienced a modest pullback today on selling tied to slumping wholesale beef values, -.175 at 110.700 (June).  Factors also affecting trade include negative packer margins, seasonally slower beef sales, and  plenteous supplies.  Look for short term support at 109 and resistance at 113.10 in the June contract.

 

Hogs saw investors selling today, as prices tumbled to 72.650 (June), -1.200.  It is expected that hog numbers will increase over the spring and summer, which will temper price increases.  Look for short term support at 71.75 and resistance at 76.25 in the June contract.

 

In Weather, widespread rains dropped a generous amount of moisture across most of the growing areas in the US last week with more on the way.  As for the 90-day temperature forecast, the eastern part of the US will tend to be above normal, while the west will tend normal. 

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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