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Closing Comments


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Closing Comments


Corn has seen a slow-down in short-covering compared to beans and wheat, – ¼ (Mar). Farmers have sold aggressively into the rally, which tends to neutralize some of the covering of shorts by funds. It appears that the market is preoccupied with spreading yesterday and today. And, Goldman will kick off its roll this Wednesday. Export sales were active today with the USDA reporting a private sale of 195K MT of corn to “unknown” destinations for 2017/18 and another private sale of 170K MT to Egypt for 2017/18. The Commitment of Traders report will be released this afternoon and it will be monitored to observe changes in managed fund positions.


Soybeans need more of a weather scare out of South America to find a reason to go higher, -6 ¼ (Mar). However, Argentina still needs at least 2-4” of rain soon (late next week) as soybeans enter the bloom and pod filling stage (corn fill also critical). Every day will be closely watched and the market will react in kind. Export sales got a boost from Mexico, normally the go-to for corn, for a private sale of 108,860 MT of beans for the 2017/18 marketing year. China has been active booking cargoes this week, but less than 25% are sourced from the U.S.


Wheat was down across all three complexes, as traders added to short positions: Chicago SRW -4 ¼, Kansas City HRW –3 ¾ and Minneapolis HRS –7 ¾ (Mar). Egypt’s GASC was back in the market looking for wheat, with Russia being the likely beneficiary of their order. Egypt has changed some of their import requirements (protein, etc), but the changes still favor Russian/Black Sea wheat. In order for other world suppliers, i.e. the US and EU to get in the game, an interruption in Black Sea production is needed. The Russian Ruble is rising but still at a level that allows them to win the price battle.


Live Cattle continued to build on gains, reaching a new short-term high in April, +.200. Yesterday and today’s close were bullish technical developments. Buyers seem to be anticipating strong demand to overwhelm short-term large supplies. Also providing support is the decline of average dressed steer weights for the week ending January 20th to 891 lbs from 896 lbs last week and 889 lbs last year.


Hogs gained across all months, with April +.725. The overall trend is down, but today’s volatile engulfing bar on the charts with a positive finish indicated they are not ready to succumb to pressure just yet. As has been previously discussed, there are large supplies to absorb ahead with heavier than normal hogs aplenty.


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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