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Closing Comments

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Closing Comments

 

Corn had mixed results as farmer selling and profit taking by traders helped to neutralize rallies, EVEN (Mar). Argentina is in the crosshairs, as all eyes are watching whether any rains materialize to bring relief. Most Argentine crop estimates are around 36.5 MMT for this year’s production, while a lack of rain the first 10 days of February could knock that down to 34-35 MMT. For the sake of comparison, the USDA predicted an Argentine yield of 42 MMT in early January. The EIA ethanol report showed production down by 2.07% vs. last week and down 1.98% compared to last year. Stocks were down by 3.17% vs. last week and up 5.37% vs. last year. Corn used for ethanol was a solid 108.14 mbu, well above the average of 103.804 mbu needed to hit the USDA annual projection. In exports, the USDA reported a sale of 145K MT to “unknown” destination.

 

Soybeans showed correction today as the market had become technically overbought with the highest RSI since July, -4 ½ (Mar). There was a small amount of rain that fell in Argentina, but it was on an area that produces only 4% of the corn/bean crop. If no rain falls for the next 10 days, you will see an impact on production which will in turn fuel the market. The Dollar has been under pressure, but was able to climb back up just over 89.00. The Dollar/Brazilian Real ratio has been providing positive support, heading diverging directions. Farmer selling has been active (though not as much as corn), which helped to mute rallies. Export sales were quiet today.

 

Wheat took a pause today, after several break-out sessions for the winter wheats: Chicago SRW –5 ½ and Kansas City -2 ½ (Mar). Minneapolis spring took the largest hit, -8 ¾ (Mar). Chicago wheat filled the gap on the chart from yesterday, before selling started to taper off. There is not much fresh news since the poor winter wheat conditions earlier this week, and the Dollar did not provide much of a supportive role today. Look for tomorrow’s action to indicate if this was just a pause for some profit taking.

 

Live Cattle pushed lower but were not able to take out yesterday’s low, -.975 (Feb). Some of the selling is attributed to chatter of weaker cash markets. The battle of stronger than expected demand vs. burdensome supplies continues.

 

Hogs were up in the front month, +.775 February, but down in the deferred months. Hog slaughter is up, outpacing last year same week by 5.6%. Normally, it would be expected that 1st quarter production would be down several hundred million lbs from the 4th quarter. Will seasonal strength start to develop in the near future?

 

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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