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Closing Comments


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Closing Comments


Corn strained under the weight of a less-than-friendly report, -2 ½ (Mar). While not much was a surprise, national yield was upped to 176.6 bpa from 175.4 bpa in November. But, this yield was offset by a decrease in harvested acres by 400K, paring back the rise in overall production. U.S. Quarterly corn stocks were pegged at 12.516 bbu, over the average estimate of 12.431 bbu. This resulted in a reduction of the feed residual number by 25 mbu. Ending U.S. stocks in 2017/18 are projected to be up 40 mbu. With an increase in wheat acres and other crops, i.e. sorghum, cotton and soybeans performing better than corn, will this result in a reduction of estimated corn acres come the March Report?


Soybeans found strength in a less-than-bearish report day, surging to the closing bell, +10 ½ (Mar). With funds over 100K contracts net short, investors took action with short-covering of positions. National yield was reduced from 49.5 bpa to 49.1 bpa. Exports were pared down by 60 mbu, but domestic crush offset as U.S. Quarterly stocks were in line with trade estimates at 3.16 bbu. All-in-all ending stocks were raised a modest 25 mbu. Soyoil stocks were reduced 80 million lbs, which is a 5-year low. It would appear that today’s results will not sway many farmers away from planting more beans in 2018.


Wheat reacted with volatility to the Report, due to higher than expected acres, -12 ¾ (Chicago March). Winter wheat seedings were projected at 32.6 million acres vs. estimates of 31.4 million acres and 32.7 million acres last year. U.S. wheat stocks also got a bump by 29 million bushels due to less feed and seed use. Wheat exports escaped the chopping block, unchanged. On the world stage, Russian wheat production was boosted by 2 MMT, but Black Sea stocks are down, neutralized by increased domestic and export demand. Other results: Kansas City HRW –14 and Minneapolis HRS –16 ½ (Mar).


Live Cattle seem to have stabilized after putting in a new short-term low yesterday, +.300 (Feb). With consumers looking forward to keeping more of their paychecks in 2018 and a strong U.S. economy, there is the potential for much better than expected demand on the horizon.


Hogs were able to turn away the bears after the key reversal on Wednesday that carried into yesterday, +.600 (Feb). While the market appears susceptible to selling with average weights up and slaughter higher by 5.5%, the economy is trending strong.


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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