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Closing Comments

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Closing Comments

Corn ended the week on a positive note, +4 ¼ at 3.70 ¾ (July) and +4 at 3.88 ½ (Dec). The eastern part of the Corn Belt received 1-2” of the wet stuff in some areas, but it is expected to end later today and drier times look to be ahead for MO, IL, IN and MI. However, the cold weather in addition to the rains have taken a toll on seed in the ground and emerging plants. There is a chance of a frost/freeze Sunday, Monday and Tuesday mornings in the Midwest. Look for June crop ratings to possibly be considerably lower than recent years. In other parts of the world, BAGE updated numbers for Argentina’s corn harvest at 29% complete compared to 26.3% last year at this time.  Ukraine’s corn planting progress is at 53% complete vs. 68% last year. China has a very large reserve of corn that they are beginning to auction. On the block initially is 2.5 MMT of 2011 and 2012 crop, from an estimated reserve bank of 100-200 MMT. In Europe, France AgriMer estimated corn planting at 84% complete vs. 76% last week.

 

Soybeans traded both sides of unchanged, -1 ¼ at 9.73 (July) and +1 ¾ at 9.66 ½ (Nov). The soy complex received support on news announced from the U.S. International Trade Commission’s vote today, with a 5-0 vote in favor of imposing anti-dumping duties on Argentina and Indonesia biodiesel.  What does this mean? The Commerce Dept. will not likely lower the boom on tariffs immediately, but it is already having an effect, as both countries’ imports of biodiesel to the U.S. are down sharply. The has the demand potential equivalent to double the existing available U.S. ending soyoil stocks. The USDA reported a private sale of 132K MT of soybeans to “unknown” for 2016/17. The U.S. has had a counter seasonal opportunity for Chinese sales, as Brazilian farmers have been holding on to their beans, due to low prices.  However, the Brazilian Real has declined recently, which has resulted in a spike in selling. BAGE reported numbers on Argentina, showing soybean harvest to be 49% complete compared to 32% last week.

 

Wheat, like corn, was able to end the very volatile week on strength, with the entire complex in the green: Chicago SRW +4 ½, Kansas City HRW +5 ½, and Minneapolis +6 ¾ (July). Stats Canada came out with their wheat numbers today and they penciled all wheat stocks lower than expected, 16.601 MMT compared to 18.3 MMT.  Last year at this time, Stats Canada was at 14.38 MMT.  The western Plains are going to be getter some much friendlier, warmer weather in the upcoming week, after the frost bite from last week caused significant, but yet undetermined, damage to the hard winter variety. The Wheat Quality Council gave their estimate of 46.1 bpa on KS wheat compared to 57 bpa from the USDA last year. For an overall crop total, they estimate 282 million bushels, much smaller than the 467 million last year. Regarding wheat exports, recent customers on the board included Tunisia for 75K MT of durum, Iraq for 50K MT of U.S./Canada/or Australia, and Taiwan looking for 96K MT of U.S. wheat. In Europe, France AgriMer pegged soft wheat at 74% good/excellent compared to 78% last week due to dry conditions they have experienced.

 

Live Cattle was limit down in a large reversal, with feeders moving in sync, -3.000 at 128.300 (June).  The market began the session extremely overbought. It is likely we will see aggressive selling in the cash market, with many short hedgers exiting market positions. Technically, the daily stochastics crossed over, confirming a lower price direction. The wild volatility leaves one to wonder – how will we open on Monday?

 

Hogs could not stay positive, with cattle limit down across the board in fats and feeders, -.150 at 76.325 (June). The market is overbought with a large premium on futures vs. the cash index. Weekly export sales were down considerably to 13,800 tonnes from 28,525 (last four week average).  Buyers may be advised to be patient/cautious, as technically the market is due for a correction, with a wide basis.

 

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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