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Closing Comments


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Closing Comments


Corn broke out of the post-report doldrums today, +4 ¾ (Mar). Is it possible that concerns of reduced plantings are behind the spike? It is thought that farmers will seed more sorghum, barley and cotton this year based on current prices. If this is the case, corn acres could actually drop by 1.0-1.5 million acres, instead of rising to the 91 million acres that had been forecasted by the November Baseline report. Not to mention that many farmers are intending to switch more corn acres to beans due to profitability. The EIA Ethanol report is delayed until tomorrow, and it will be key for production to resume the torrid pace it was on before last week’s setback. Ethanol margins have improved to a modest degree, with a minority of plants still losing money.


Soybeans made a key reversal throughout the session and fought back over seven cents from off its low to finish + ¾ (Mar). South American weather has not provided any fuel for rallies, although it has not been ideal across the entire growing region. If things stay the same ten days from now, there may be more to talk about. Like in corn, chatter of more sorghum, barley and cotton acres could also help out beans, which potentially could be looking at a 500,000 acre reduction if acted upon. Beans snagged a private sale of 130K MT to “unknown” destinations for 2018/19.


Wheat found support in the other grains and a declining U.S. Dollar: Chicago +5, KC +5 and MN EVEN. Egypt purchased several more cargoes of Russian origin wheat at $4 above last week’s prices. The U.S. is now that much closer to being more competitive, especially with the Dollar sinking to new lows. Additionally, it goes without saying that managed funds are in a very large net short position, which is resulting in some short-covering of positions. Export loadings announced yesterday were slightly over expectations, but the overall pace continues to fall further behind last year’s levels.


Live Cattle rose sharply, breaking through both the 100 and 200-bar moving averages to lock-limit-up in the front month, before finishing +2.875 (Feb). Additionally, the spike on the charts filled the gap left early last week. It is thought that talk of beef demand being stronger than originally expected may be the impetus behind this short-term rally.


Hogs fell back after yesterday’s new high, with some profit taking in order, -1.175 (Feb). Is this just a blip or is the outlook for hefty supply ahead in the back of traders’ minds? The CME Lean Hog Index jumped to 71.15 yesterday, a $2.69 increase from last Friday.


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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