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Closing Comments


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Closing Comments


Corn pressed lower with weakness coming from outside equity markets as well as more confidence around Argentina receiving modest rainfall, -2 ¾ (Mar). The DOW dipped below 25,000 for the first time in a month. Mid-February will be critical for follow up rains, as Argentina is still running at 40-60% of normal growing season precipitation. USDA Weekly Inspections announced today provided support, as corn was pegged at 1,073,868 MT for the week ending Feb 1st compared to estimates of 900K MT. This puts corn at pace running 33% behind last year. South Korea also stepped up to the platter and brought home a 130K MT purchase of corn for the 2017/18 marketing year.


Soybeans nosed lower into the close, under pressure from outside markets and less threatening weather, –9 (Mar). USDA Inspections reported today helped to neutralize losses, as soybean loadings came in at 1,303,723 MT compared to expectations of 850K MT. Soybeans are running 14% behind last year-to-date. Additionally, the USDA announced a private sale of 198,600 MT of soybeans to “unknown” destination for 2017/18. To the North, Stats Canada pegged their canola stocks at 14.14 MMT, below expectations of 14.3 MMT, but higher than last year’s 13.38 MMT. While some rains are appearing on the radar for Argentina, look for La Nina weather patterns to continue in Argentina and the U.S. Plains for the next several weeks, with the market being influenced on a day-to-day basis.


Wheat continued to give back recent gains, led by Chicago’s soft variety, -6 ½ (Mar.). Kansas City HRW and Minneapolis HRS were –1 ½ and –2 respectively. Inspections announced by the USDA today just missed the mark, with wheat loadings reported at 428,557 MT for the week ending Feb 1st, compared to estimates of 475K MT. Wheat is slightly behind last year, calculated at a 5% lag in loadings. Stats Canada data released today showed all wheat stocks at 23.55 MMT, slightly below estimates of 23.9 MMT, and below last year’s 24.09 MMT. Next week’s weather forecast has dryness and extremely variable temps across TX, OK, W KS and CO.


Live Cattle trended lower across the complex, with April -.650. The market is battling an overbought technical condition, a slowing beef market and a bit of weakness from consumer demand. Look for tomorrow’s action to give clearer direction for the week.


Hogs were down sharply across the deferred months while maintaining positive in the front month. February finished +.625 while April was down -.225 and June -.950. The CME Lean Hog Index was up ever so slightly on Friday by +.02 to 73.87. When looking at past year history, one would expect the downtrend to persist into late March. It is possible that snow and cold weather could give reason for a short-term bounce, as this will slow hog marketings.


USDA Report this Thursday at 11am, including Crop Production and Supply/Demand.


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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