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Closing Comments


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Closing Comments


Corn showed modest gains post-report before succumbing to pressure, -1 ¼ (Mar). The report did not produce any fresh news that will move the CBOT out of a sideways trading mode in the near-term. Ethanol demand was raised by 50 million bushels, resulting in U.S. corn ending stocks being lowered by 50 mbu. World corn ending stocks got a small increase, up 500K MT. Keep any eye on whether rains materialize/dissipate over Southern Brazil and Argentina over the next few days, as it will be essential for a South American weather narrative to emerge in order to see any kind of a sustained recovery.


Soybeans responded as expected to a mildly bearish report, -6 ¾ (Jan). WASDE cut U.S. bean exports by 25 million bushels, resulting in ending stocks being raised by 20 million bushels to 445 mbu. World soybean ending stocks were upped to a record 98.3 MMT, directly attributed to the cut in U.S. soybean exports, as the South American soy crop production was left unchanged. USDA daily export sales on the board today included a private sale of 168,300 MT to “unknown” destination for 2017/18. Also, a previous sale of 492K MT to “unknown” was changed to “China”. The hope is China is as under-bought as rumors have purported, with U.S. export sales needing a shot in the arm.


Wheat responded in kind to burdensome report results, -2 ¾ (Chicago Mar). WASDE increased U.S. wheat stocks by 25 mbu to 960 mbu, tied to a reduction in U.S. exports. The U.S. is positioned relatively well to compete on the world export stage, but a lot depends on Russian and European export pace. If Russia can continue on its record pace of export loadings, it will be difficult for the U.S. to make headway. World wheat ending stocks were also upped by 1 MMT to a record 268.4 MMT. European and Canadian wheat output were both viewed to be higher, while the Australian crop was viewed steady with last estimates. Other wheat results: Kansas City HRW -1 ½ and Minneapolis HRS -3 ¼.


Live Cattle had a Turnaround Tuesday, reversing course from multiple sessions to the downside, +1.425 (Feb). Trade action took a corrective posture today, as long liquidation selling has been the recent trend, with specs still holding a large net long position.


Hog futures were up modestly in the expiring Dec contract, but down in the deferred months, -.500 (Feb). Speculators continued to shed length, as confidence has been dampened by recent losses. Dec futures will go off the board on the 14th. The recent slide can be contributed in part to a weak pork cut-out and producer selling pressure before the holidays.


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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