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Closing Comments


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Closing Comments

Corn took the lead today with a big bar on the charts, +7 ½ at 3.67 (May).  Futures found support in continued wet weather in the U.S. and South America (Eastern Argentina and far southern Brazil) as well as a private sale announced by the USDA of 101,600 MT of corn sold to “unknown” destination for 2016/17.  While today was positive, it is hard to find a reason at this juncture as to why managed funds would cover their large short position, and old crop supply continues to grow.  It is likely the market will wait for the focus to flip to new crop and planting here stateside before building in much weather premium.  The USDA weekly inspections penciled in corn at 1.170 MMT for the week ending April 6th, compared to expectations of 1.450 MMT.  Look for nearby support at 3.57 ¼ and 3.55.


Soybeans were able to stay virtually even, receiving support from an oversold condition and copious rains in Argentina, – ¼ (May).  Beans and the rest of the grains are experiencing the tug-o-war between the bulls and the bears.  The bears are counting on large stocks, enormous South American  production and the lack of news around the idea of planting delays.   The bulls are focused on possible crop hiccups and the complacency that comes with multiple years of repeat performances.  A recent positive development is the meeting between Presidents Trump and Xi last week, in which they were able to stabilize relations between the two superpowers in the short term.  However, there is still much open for debate and consensus, not only on trade but North Korea.  Soybean weekly inspection numbers released by the USDA this morning showed a solid 832,957 MT compared to estimates of 550K MT. AgRural confirmed thoughts of a bumper Brazilian crop, by raising their production forecast from 107 MMT to 111.6 MMT.  The USDA is also expected to raise their estimate for Brazil from 108 MMT to 110 MMT. 


Wheat continues to find support near current lows, +4 ¾ Chicago, +3 ¾ KC and +1 ½ MN.  Will the WASDE report indicate any sort of decline in stocks?  Old stocks are large, but that is widely known and thought to be priced into the market.  USDA inspections were above expectations for wheat, coming in at 641,365 MT for the week ending April 6th, vs thoughts of 600K MT.  It looks like weather will continue to play a role, as the 6-30 day outlook includes above average rains for most HRW areas.  This will improve yield prospects, as areas of the Dakotas, MN, MO, OH Valley and AR have been dry and will welcome the increased precipitation.  On the global stage, Russian wheat exports for 2016/17 were reported to be 5.5% higher compared to last year, at 22.19 MMT. 


Live Cattle is susceptible to rallies with a large discount to cash – in that vein, futures were up solidly today, +1.050 at 121.100 (April) and +.500 at 112.300 (June). As part of China’s efforts to avert a trade war with the U.S., it has been reported that the PRC is ready to lift the ban on U.S. beef imports.  This also seemed to help provide a spark to the market.  In boxes, choice rose $.13 and select fell $1.62.  First Notice for April Live Cattle is today.


Hogs found support in cattle today as well as a boost in pork cut-out values Friday afternoon, finishing even in April and +.500 at 73.275 (June).  Carcass values are firmer at $76.85, up $1.57 per cwt.  Hogs are oversold, and seemingly in position for a positive bump, as we move into grilling season. 


Tomorrow is the April USDA WASDE (World Agricultural Supply and Demand Estimates) Report at 11am CDT.


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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