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Closing Comments

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Closing Comments

 

Corn was steady most of the day but did end up closing on the higher end of the trading range and up .01 ½ cents on the day. USDA supply/demand report tomorrow. Traders expecting to see lower production numbers for Brazil and Argentina. Rain expected for the dry areas of Argentina starting this weekend but after this event it looks to get dry again. Brazil production is expected to show 89.3 million tonnes compared to 92.4 million tonnes in January. The USDA’s estimate in January was 95 million tonnes. Another reason for stability in the markets today was the China National Grains and Oils Information Center increased consumption to 244 million tonnes from 215.9 million tonnes, corn used for animal feed to 146 million tonnes from 134 million, and corn refining also increased to 78 million tonnes from 68 million. This puts China at a deficit in corn of 25.6 million tonnes which is larger than previously expected.

 

Soybeans closed down .03 ½ cents today with traders fearful that the report tomorrow won’t show declines as high as expected in South America. Rains are expected in dry areas of Argentina over the weekend but weather risk increases beyond that time frame. Brazil still has a slow harvest and more rain coming but expectations for crop size are high. Most expect an increase of almost 3 million tonnes. The concern is if it is bigger are the problems in Argentina bad enough that a better than expected crop in Brazil wouldn’t offset the reduction from Argentina.

 

Wheat closed up .12 cents today and close to its high’s for the day. It will be interesting to see where the funds short position is this Friday after a strong week. Funds were still very short after last week. For now this rally is probably funds taking risk off the table will a huge short position and concerning weather in the southern plains.

 

Live Cattle seemed to separate themselves from the stock market this week amid the volatility.

Larger supplies combined with better than usual demand seems to be keeping people on the sideline and out of pushing this market hard one way or the other. Traders will want to see some demand numbers again before regaining any confidence to see if the stock market movement has changed consumer sentiment.

 

Hogs closed strongly lower again today. Pork prices were down 5.2% last week. Funds held a net long position going into this week which has opened them up to more selling. Increased supply ahead is the main focus right now.

 

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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