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Closing Comments

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Closing Comments

 

Corn received relatively friendly news from the February Crop Report, + ½ (Mar). U.S. ending stocks were pegged at 2.293 bbu vs. estimates of 2.477 bbu. This was due in large part to corn exports being raised by 125 mbu. Corn stocks/use is basically the same at 16%. Will corn exports continue to grow if Argentina’s prospects decline on less than optimal weather? Brazil also could play a role, as CONAB downgraded its estimates for safrinha corn acreage. If Brazil has less than perfect conditions, they are sure to have lower production also. World ending stocks were also estimated lower than the average estimate and lower than last year. USDA Weekly export sales announced this morning were a solid 1,769,600 MT, above the range of expectations of 1.25-1.75 MMT.

 

Soybeans shrugged off a modestly bearish Report, with the strongest showing of the grains, mostly driven by soymeal, +4 ¾ (Mar). U.S. exports were cut by 60 mbu, and U.S. ending stocks increased proportionately. World soybean stocks were slightly lower than expectations, but 2 MMT higher than last year. Brazilian and Argentine soybean production were both estimated to be slightly higher than expectations, but both less than last year. China’s import demand is not expected to change, but will they source more from Brazil due to trade friction with the U.S.? USDA Weekly export sales were at the very top end of the range of estimates, coming in at 751,600 MT vs. 400K-750K MT.

 

Wheat was in the doldrums as ending stocks are plenteous. U.S. wheat exports were reduced by 25 mbu, which reflected in higher U.S. ending stocks of 1.099 bbu vs. average estimates of 989 mbu. World ending stocks were less than expected but higher than last year. Average estimates were pegged at 267.5 MMT, while the USDA projected 266.1 MMT. Wheat seems to be driven less by demand and more by the Drought Monitor across the S Plains. USDA weekly export sales were well within the range of 250K-500K MT at 415,500 MT. Chicago SRW -4 ¼, Kansas City HRW –6 ½ and Minneapolis HRS + ¾ (Mar).

 

Live Cattle futures were down today as sellers won the day, -.250 (April). The recent fall of the DOW and equity markets has given traders cause for concern over consumer demand. But, on the other hand, with more money in hand from tax reform on paycheck stubs, it is thought demand indicators could also be supportive. Recently, speculators have taken some profits on long positions. Stay tuned.

 

Hogs were mixed but mostly positive across the months, +.225 (April). Technically, hog futures are oversold after this week’s tumble, but stabilized today. However, the Commitment of Traders report showed an overbought condition and short-term fundamentals are tending bearish.

 

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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