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Closing Comments


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Closing Comments


Corn had a modest setback after yesterday’s buying blitz, -1 ½ (Mar). EIA Ethanol reporting was a day later this week due to the holiday. Ethanol production rebounded after last week’s pull back, up 6.53% over last week and 0.66% over last year. Ethanol stocks were up slightly over last week and 7.71% over last year, which is a record high. Corn used in ethanol production was pegged at 110.35 mbu, well above the average needed (104.146 mbu) to meet the USDA annual projection. Ethanol margins have been improving, which should bring plants back into breakeven territory. In exports, Taiwan purchased a cargo of U.S. corn off the PNW, which is indicative of U.S. price competitiveness.


Soybeans rallied on technical considerations, breaking through trend line resistance before settling, +4 ¼ (Mar). Within shouting distance is the 200- bar moving average at 9.79. A serious South American weather story has yet to emerge. While Argentina’s crops continue to battle dryness, there has been sufficient moisture to dampen the bulls’ enthusiasm. And, Brazil has been experiencing highly favorable conditions for another bonanza production. USDA weekly export sales were delayed until tomorrow. There were no new sales announced today.


Wheat is showing some indications that there is not a lot of downside risk, with winter wheats experiencing modest gains: Chicago +3 ¾ and KC +2 ½. The Drought Monitor in the U.S. continues to show extremely dry conditions and we have continued to chew down protein supplies over the last two years. But, the USDA numbers have the final say, and the battle continues over acres to be planted, etc. Minneapolis spring wheat was down -1 ¾.


Live Cattle built on yesterday’s large gain, +.975 (Feb). It is thought that the ensuing months could feature a much larger consumer demand, and continued expansion of exports, according to Hightower. Futures are now at a slight premium to the cash market.


Hogs regained a portion of yesterday’s loss, +.325 (Feb). Futures have continued in this pattern of uptrend, since the low established on Dec 14th. The overall fundamental thought is that it may be difficult for hogs to maintain this trajectory in the face of heavy near-term production expected. However, the economy is strong and consumers will have more disposable income this spring.


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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