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Closing Comments

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Closing Comments

 

Corn rebounded for a small gain, as traders digested the report served up yesterday, +1 ¼ (Mar). As the USDA reported, ethanol demand continues to support corn, in spite of lackluster exports to-date. While the EIA Ethanol report today showed production down from last week, it was still 4.71% over last year, coming in at 7.623 million barrels for the week. Ethanol stocks were down slightly from last week, but still running a hefty 17.29% over last year. Corn used for ethanol was 113.36 mbu, well over the 104.848 mbu weekly average needed to meet the USDA projection for the year. Will production be able to continue at this rate with current demand?

 

Soybeans were able to find stable footing at the 100-day moving average after yesterday’s post-report setback, +3 ½ (Jan). The USDA trimmed back exports, and the U.S. needs to make up ground in the next several weeks before the new Brazilian crop hits the market in February. The trade is squarely focused on South American weather and any changes to the forecast. Look for next week’s potential rains to be very influential, depending on how much and where they occur. Forecasters are fairly confident that Argentina and Brazil could both see two separate rain events in the next ten days.

 

Wheat took over the reins today, leading the grains higher with help from a weak Dollar, +6 (Chicago March). According to AgResource, wheat’s gains can be attributed to short covering and reduced precipitation chances for the parched Plains next week. Russia continues to fortify its position as the world’s leading wheat exporter, as they have worked out an agreement with Brazil that will put them in first position to supply the difference when Argentina encounters a yield shortfall. The U.S. is on the outside looking in, as previously it was an opportunity to supply U.S. HRW. Kansas City HRW +5 and Minneapolis HRS +5 ¾.

 

Live Cattle lost ground again today after making a strong recovery yesterday, -.775 (Feb). The USDA revised beef production estimates for the 4th and 1st quarters lower by 95 million lbs and 5 million lbs respectively. Additionally, they lowered the 2018 yearly estimate by 30 million lbs. The market appears to be oversold in its current state. Has it reached a point where selling is drying up?

 

Hogs are having a hard time overcoming pressure from declining pork prices. However, futures found support at the 200-bar moving average, closing above and posting a modest gain, +.275 (Feb). The USDA reported yesterday that 4th quarter pork production is estimated to be 200 million lbs lower, while on the other hand pork bellies are pressuring futures, losing $7.20 on Monday and $11.35 yesterday.

 

Closing Market Snapshot  

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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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