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Closing Comments

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Closing Comments

 

Corn felt the weight of a falling soybean market today, inching back down into the lower half of the trading range, – 1 ¼ at 351 ½ (Mar). Exports were announced in the lower half of the range of expectations at 876K MT vs. estimates of 750K-1.2 MMT. While this is not a negative number in and of itself, corn exports continue to lag on a yearly basis, down 28% from last year.  There were no new export sales announced this morning. Look for the next USDA balance sheet on next Tuesday’s  WASDE report, but no new production numbers are expected until the January report.

Soybeans received pressure from the Chinese Dalian market seeing a decline in futures to the lowest level in 9 years, -10 ¾ at 992 (Jan). This was the largest single session loss in a year. On the logistical side, the PRC has been slow to issue offloading certificates to incoming cargoes, but that has loosened up as soybean vessels are arriving with increasing numbers. Weekly export sales came in very strong, as the USDA announced 2.085 MMT, with the vast majority slated for 2017/18, vs. expectations of 1.0-1.5 MMT. Soybeans still have some “catch-up” to do in order to meet the USDA export yearly estimate.

Wheat pushed yet lower into uncharted territory, -3 ¾ at 421 ½ (Chicago Mar). The weak tenor of grains in general was not helpful to the wheat complex, as it traders are hard pressed to find fresh news to latch onto. The USDA reported weekly export sales at 322K MT, on the low end of the range of estimates of 250K-500K MT. As with corn and beans, wheat sales are considerably weaker this year, as the two previous weeks featured very poor export sales results. Regarding a technical outlook, the RJ O’Brien Bullish Sentiment Index is at its lowest level since 1999. Kansas City HRW and Minneapolis HRS finished – and – respectively.

Live Cattle traded both sides of unchanged as the market tries to find a short-term low, -.600 at 118.675 (Feb). There is a large supply of beef to consume, and if consumer demand drops off after holiday order bookings, it may provide impetus for more erosion in the cash market.

Hogs are struggling to stop the recent decline of futures’ values, -.475 at 68.475 (Feb). The burden of supply seems to be winning the day, with weights up 2% and slaughter expected to be up 4-5%. Not to mention, the supply of all meats is running at a high level.

 

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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