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Closing Comments

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Closing Comments

 

Corn trended lower as a deepening snowstorm in Chicago snarled the city and also slowed down trade, -3 ¾ (Mar). Causing concern were rumors that China canceled several cargoes of U.S. corn and switched them to Ukraine due to “GMO” issues. In reality, many wonder if this is a “shot over the bow” related to deepening trade rifts between the two countries. China is planning to increase ethanol usage substantially this year, which will allow them to burn through much of their old reserves. Once their reserves are pared down, will this result in much larger Chinese corn imports long term? In other export sales news, South Korea bought 202,000 MT of corn. It is thought that managed funds have covered a good portion of their net corn shorts, so keep an eye out for Commitment of Traders data later this afternoon.

 

Soybeans are still shrugging off the bearish report yesterday, while looking for any changes in Argentine weather, -4 ¾ (Mar). There was disappointment related to bean oil, as rumors have been confirmed that the latest budget bill deal did not include a subsidy for 2018 biodiesel production. However, this topic is likely not dead and may see further discussion by Congress. On the South American weather front, rains are scheduled for most of Argentina but may miss the South. Look for Monday’s trade to reflect accordingly. There were no new soybean export sales announcements this morning.

 

The Wheat complex led the way lower today with Chicago SRW -7 ¼, Kansas City HRW –9 and Minneapolis HRS –9 ½ (Mar). The Report yesterday only reinforced just how robust world ending stocks stand. The U.S. Drought Monitor is getting interesting and the Plains are lacking in the moisture department, but not enough so far to offset the record setting Black Sea crop, Ukraine’s prospects inching up and a record Russian crop. Also, it is thought traders have covered many of their net short wheat positions, so stay tuned for the COT report later today for confirmation.

 

Live Cattle demonstrated volatility again with a wide range of trade on both sides of unchanged before finishing lower for the 5th consecutive day, –.100 (April). This has been a source of frustration for traders and hedgers. The technical outlook continues to trend bearish. 1st quarter production is forecasted to be the 2nd largest on record, while the 2nd quarter is projected to be 12% over last year.

 

Hogs pushed lower with beef, with short-term fundamentals leaning bearish, -.600 (April). However, technically the market is oversold and April futures are trading at a significant discount to the CME Lean Hog Index, at well over 600 points compared to the normal of 88. Will we see a corrective bounce next week?

 

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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