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Closing Comments

Corn received support from a short-term rainy forecast, robust export sales, and a positive tone from President Trump on NAFTA, +2 ½ at 3.69 ¼ (July).  USDA export sales announced this morning showed corn at 987,900 MT, a three week high.  It was expected for the number to fall between, 750K-1.1 MMT, so another good weekly output. Weather remains an issue with wet and cold in the short-term forecast for a majority of the growing area.  Long term models show warmer and drier, but it is a bit early to put too much faith in forecasts out beyond May 10th

 

Soybeans got a boost today from weekly export sales and a short-term wet forecast + ¾ at 9.57 ¼ (July).  There is some speculation that weather delays in corn planting could switch even more acres to beans. USDA soybean export sales were above expectations of 300-750K MT, coming in at 808,100 MT, achieving a one-month peak.  Related to Mexico and the potential impact of NAFTA negotiations, Mexico buys 26% of U.S. soyoil exports, 20% of soybean meal and 6.3% of soybeans.  Any positive stories related to NAFTA will be well received.  Also, keep an eye on a bio-diesel tax credit bill that was re-introduced by Senator Grassley.  The purpose of the bill is to reinstate the $1/gal tax credit for producers instead of blenders, which will help level the playing field with competition from imports (that were given tax credits for imported biodiesel). 

 

Wheat was led by Kansas City HRW today with deepening concerns over possible freeze/frost damage, +8 ½ (July).  Chicago SRW and Minneapolis HRS were +4 ¾ and +2 ½ respectively.  Wheat export sales were light this week, with an announced 61,700 MT compared to estimates of 350-750K MT.  In Ukraine, wheat stocks are headed to the lowest level in ten years, so this will affect their export participation next year.  Russia and Turkey appear close to resolving their differences that led to a ban on Russian wheat to Turkey.  Turkey is Russia’s second largest buyer, so this has had a significant effect on their recent export numbers. This coming Monday is the start of the Wheat Quality Tour by NASS, so look for social media comments and pictures to be front and center.

 

Live Cattle had another break-out day, registering a new high at 121.525, +3.000 (June).  All market categories seemed to receive a bump from a more optimistic tone on NAFTA.  Futures also gained support from discounts to cash prices.  Supplies are tighter and beef demand is seasonally strong with grilling and Mother’s Day on the menu.  Export sales were up to 21,300 tonnes compared to 19,700 tonnes last week (mostly to Japan).

 

Hogs seemed to be aligned with cattle today, along with fund buying and short covering, as the June contract jumped out to a big gain, +2.075 at 72.825 (June).  Exports were down to 23,000 tonnes from 36,100 last week, but once again the new tone on NAFTA was a huge influence on trade.  Mexico is number two and Canada number four on the list of the U.S.’ largest markets for pork, and a lot is on the line for producers with any hints of trade wars. 

 

In Other news, President Trump’s change in tone on NAFTA, and possibly re-negotiating in the future rather than just scrapping the whole deal immediately, gave major market support today.  Mexico has been shopping South American corn, and they and Canada are big customers of grains and meats, so any positive trade news goes a long way right now.  In weather, it is a mixed bag of short-term rain and cold temps across the mid-section growing area of the U.S. while the deferred forecast is tending drier and milder temps.

 

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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