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Closing Comments

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Closing Comments

 

Corn traded both sides of unchanged as news of cooler weather and a slight increase in Argentine rains in the 9-15 day forecast put a damper on things. March corn bumped up against the 100-bar moving average before finishing, -1 ¼. While funds have been covering some of their net short positions, American farmer selling is helping to offset. USDA export sales will be announced tomorrow due to being delayed by the government shutdown.

 

Soybeans had a sharp rise before running out of buyers, EVEN (Mar). It is not abnormal to see profit-taking against resistance. It is hard to assume this bounce is over due to no big changes predicted for South American weather, the value of the U.S. Dollar, or fund willingness to exit short positions, according to AgResource. U.S. crush margins also jumped by $1.20/bu this morning. On the other hand, soybeans and soymeal are extremely overbought on the charts, so this could influence a correction. Managed funds are still estimated to be over 100K contracts net short in beans.

 

Wheat took the lead today, as all three complexes posted positive gains: Chicago SRW +1 ½, Kansas City HRW +2 and Minneapolis HRS +2 ¾. The weak Dollar under 90.00 is providing support across all the grains, but especially for wheat. Chicago has broken through key levels and the chart looks positive, with the 100-bar moving average within reach. To this point European weather has not been a big factor, as Ukraine has adequate snow cover to offset cold temps and Russia has been experiencing a moderate thermometer.

 

Live Cattle had a big correction today, closing near lock-limit down, -2.950 (Feb). The Cold Storage report provided a measure of weakness to meats in general, with the total inventory of beef, pork, chicken and turkey up 2.4% over last year and 8.6% over the five year average. However, beef inventories were down 13.8% from last year. Meat demand remains strong, and tomorrow’s Cattle on Feed report tomorrow will be influential.

 

Hogs were down all across all months, with the deferred months seeing larger declines. February futures were down -.450. Speculative buying has been active, and likely some profit taking was in order today. There is a large supply ahead to digest with large belly inventories, but the economy and demand is good.

 

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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