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Closing Comments

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Closing Comments

Corn followed beans on a volatile, post-report ride, ending the day – ½ at 3.66 ½ (May) and – ½ at 3.90 ½ (June).  With this month’s report behind us, attention will turn to new crop and potential premium that may be built in by weather, planting, etc.  To summarize the USDA report today, corn ending stocks were estimated to be unchanged in the U.S. compared to last month’s report and higher globally by 2.3 MMT.  South American crop production got a boost as Brazil was upped to 93.5 MMT vs. last month’s 91.5 MMT.  Argentina was also estimated higher at 38.5 MMT vs. last month’s estimate of 37.5 MMT.  U.S. on farm corn price is penciled in at $3.40 compared to $3.40 last month and $3.61 last year.  With the entire growing season in front of us, where do we go from here?

 

Soybeans were sharply lower today initially on bearish news from Supply and Demand as well as Crop Production releases, but made a solid comeback to finish, -2 ½ at 9.39 ¼ (May) and -1 ¼ at 9.48 ½ (Nov).  Soybeans garnered much attention by report watchers this month, as the USDA report inked them higher than last month in every category.  U.S. ending stocks were seen up 10 MMT to 445 MMT, while world stocks went from 82.8 to 87.4 MMT.  Also changing for higher compared to last month was the South American crop production, with Brazil leading the way at 111 MMT vs. 108 MMT.  Argentina, not wanting to be outdone, also showed an increase of 500K MT over last month at 56.0 MMT.   U.S. on farm soybean price is viewed at $9.55 vs. $9.60 last month and $8.95 last year.  In China, the USDA raised estimates of their soy imports by 1 MMT to 88 MMT with a 6.2% expected gain in crush.  Time will tell if we have put in a new low. 

 

Wheat exhibited a big mood swing today, as they also plummeted early but made a big reversal to finish in the green across the board.  Minneapolis was the star of the show with a gain of +7 ¾ (May), followed by Chicago’s SRW at +4 ½ and Kansas City’s HRW at +4 ¼.  As expected, wheat was of the same persuasion as its grain siblings, showing ending stocks higher everywhere.  In the U.S., stocks increased from 1.129 MMT to 1.159 MMT, and globally from 249.9 MMT last month to 252.3 MMT.  It is not the norm to see all three grains show such large increases in world stocks this late in the season.  Weather has been a big factor with wheat, and as of now US winter wheat is looking better, and there is no evidence of a problem for the EU or FSU.  U.S. on farm wheat price is pegged at $3.85 vs. $3.85 last month and $4.89 last year.

 

Live Cattle continued their bullish mindset, boosted by futures’ discounts to expected cash prices this week and the news China plans to lift bans on U.S. beef, +2.150 at 123.250 (April) and +1.400 at 113.700 (June).   Beef demand is lower this time of year, but usually gets the seasonal bump after Easter.  Keep an eye on the closely monitored Fed Cattle Exchange tomorrow for price direction, with 5,200 head on the sale block.

 

Hogs initially exhibited weakness after the USDA grain report this morning, but reversed course to show a gain in the June contract, +.725 at 74.000.   On the one hand, cash prices are being pulled down by bigger hog numbers and holiday plant shutdowns, but on the other hand wholesale pork values could get a bump from post-Lent grilling.  Packer margins are up $32.50 per head from Monday’s positive $28.40 per head.   

 

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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