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Closing Comments

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Closing Comments

Corn experienced vigorous corn buying yesterday, with funds buying over 20K contracts.  Today was more of the same early on. All eyes are on the weather map, with systems developing that could bring major precipitation across the growing regions in the next several days.  The forecast was adjusted a little about midday today with the end of next week looking drier than previously expected.  This sent the corn market into a tail spin taking back most of what weather premium was added yesterday.  This is a weather market right now and if the end of next week is drier the trade will assume that most of the corn crop will have a better chance to get planted before the middle of May.  Which is looked at as a crucial point.

In other news EIA ethanol reported production down -6K bbl to .987 million bbl.  Ethanol stocks increased by 235K to 23.27 million bbl.  Taiwan bought a cargo of Brazilian corn overnight.  Ukraine reported exports of 3.1 MMT in March.  Global exports are becoming competitive, with multiple options on the menu for buyers. 

 

Soybeans are the follower at this point and with Corn and Wheat turning lower soybeans had no problem following suit.  Not a lot of positive information for beans aside from good demand.  A late spring will not be perceived to be a good thing for a crop that is already expecting a large amount of acres.  Soybeans have shown the ability to be planted later without a huge yield drop. Brazil is wrapping up a large harvest and most of that should already have been absorbed by the market.  Demand will be the crutch for this market while it tries to fight all the negative current information.  China’s soybean imports are expected to reach 8.5-8.6 mmt in April, 9.0-9.5 mmt in May and 8.0 mmt in June.  Soybean crush and soymeal demand are both expected to rise as well.

 

Wheat prices held in better today with the main concern there being cold weather over the weekend.  That did not change in the midday run today.  Frost advisories will be closely watched to see if there is any chance for potential wheat damage on an already reduced amount of acres.  Europe is not expected to get any rain relief in any of drought areas and the current forecast will also keep spring wheat planting behind pace.  With all of this current info it would be hard for the funds to maintain their record short position.  You would think impossible but they seem to have a strong hold on this market so we will have to see how nervous they get and if the forecast holds together.

 

Live Cattle and Feeder markets triggered a lot of short covering in contracts today after swing highs from Friday were taken out and it was clear that prices would stay that way into the close.  Nearby Feeder Cattle closed at or near limit up, while the Live markets were only close to their limits.  New support would now be at yesterday’s resistance level of 117.50 and resistance would now be at 122.75 in the June contract.

 

Hogs took off on a blistering pace today, +2.300 at 71.825 (June).  Up until this week, it appeared that hogs may produce a counter seasonal trend, but made a strong reversal today.  The USDA Cold Storage report yesterday afternoon, showed March total pork stocks up to 555.052 million lbs. from estimates by analysts of 546.1 million lbs. Cash hogs and carcass values are weak while packer margins are strong.  Have downward cash prices now stabilized with the usual tightening of seasonal supplies?

 

Hogs gave back some of yesterday’s gains and the recent downward trend since mid-March remains intact for now.  Technically, the charts resisted right where they needed to but are pushing the top end. 

 

In Other news, the White is planning to announce a massive tax cut plan, “biggest in history,” for both corporate and personal taxes.  This will be a bullish development for stocks and other markets.

 

First Notice on May futures is Friday, April 28th.

 

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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