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Closing Comments

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Closing Comments

Corn saw choppy trading on lower volumes, as all the grains were in a selling mode today, -5 ½ at 3.69 ½ (July) and –5 at 3.87 ¾ (Dec). Not helping buyer optimism, the USDA planting progress was in line with expectations, with an announced 84% complete compared to the five-year average of 85%. The biggest delays are in Kansas and Pennsylvania, which are running 16% and 10% behind respectively. Re-planted acres are a big topic of discussion this year, but they do not show up on the crop progress report, so their impact remains to be seen. Trade is looking to June weather to be the next market mover, and until this is known, sideways trade will likely continue.

 

Soybeans gave back much of what they had re-gained the last two sessions, -8 ¼ at 9.48 ¼ (July) and –7 ¾ at 9.48 ½ (Nov). The USDA announced soybeans 53% planted compared to the five-year average of 52%. Trade is continuing to look for a story with a bullish bent, but is not finding anything yet that is perceived as lowering acres or trendline yield. On a positive note, the USDA reported a private sale of 126K MT of soybeans to “unknown” destination for 2016/17. U.S. soybean prices have remained competitive later into the season, based on a weaker Dollar and a relatively strong Real.

 

Wheat also experienced sideways trade, as the market corrected some of its recent gains. Minneapolis HRS and Kansas City HRW led the way down, both -5 ½, followed by Chicago SRW –4 ¾ (July). Bearish news included the USDA serving up a crop condition rating of 52% good/excellent (up 1%), with 72% headed, and spring wheat showing 90% planted (five-year average is 84%) with 62% of the crop emerged. There are still unknowns with wheat related to quality/protein issues, as well as damage from frost/freeze a couple weeks ago.

 

Live Cattle continued their back and forth trading, giving back recent gains –.850 at 123.075 (June). Packer margins are still profitable. Boxes are mixed with Choice down $1.42 at $246.46 while Select is up $.32 at $223.15. Look for the Cattle on Feed report on Friday at 2pm CDT.

 

Hogs are pointed higher, with a nice gain in the front month, +.800 at 80.150 (June). Like cattle, packer margins remain profitable and carcass values are up $1.78 to $90.49/cwt. Demand has remained strong and seasonal trends are friendly this time of year.

 

In Other news, Robert Lighthizer, US Trade Representative, announced that although the U.S. is not interested in pursuing TPP, they are interested in maintaining good relations with the Asian Region, and working on crafting bilateral agreements. Also, the most recent White House budget shows a significant cut to agriculture, with $46.54 billion being slashed over the next 10 years. This includes $38 billion to be cut from subsidies and crop insurance.

 

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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