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Closing Comments

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Closing Comments

 

Corn followed soybeans and soymeal to new heights while getting a boost from equity markets, closing at +5 (Mar). The DOW is back up several hundred points in addition to Argentina weather concerns, boosting grains across the board. USDA weekly inspections were 835,131 for the week ending February 8th, below expectations of 950K MT. The Commitment of Traders report showed managed funds shed a large chunk of their net short positions to the lowest level since mid-August, at a mere 70,000 contracts.

 

Soybeans got a huge boost from soymeal as Argentina turns drier, +18 ¾ (Mar). Argentina did not receive adequate rains over the weekend, and it looks like dry and hot weather will persist, with a potential weather ridge forming late month adding to concerns. The center and southern growing regions of the country are garnering the most focus. Argentina is the world’s leading soymeal exporter (50%), and their tight supplies in the near term along with weather concerns sent end users scrambling. Chinese crushers also are under-bought and are looking for supplies ahead of their Lunar Holiday. USDA weekly export inspections were a mixed bag, with China canceling 455K MT but “unknown” adding 198K MT and 116K MT.

 

Wheat followed corn and beans higher, with expectations of declining prospects for multiple states – Chicago SRW +15, Kansas City HRW +12 and Minneapolis HRS +6 ½ (Mar). The Drought Monitor is growing with weather prompting concerns well into spring. Also providing support are rising world wheat prices. Keep an eye on how much rain falls over HRW areas as this will determine how this rally goes and if it is more than just a short-term opportunity to take profits.

 

Live Cattle turned positive amid strength from the grains and financial markets, +1.375 (April). While an upturn in demand has helped cattle recently, the fall in equity markets cast a cloud of doubt. But, today the grains are up on South American weather and the DOW seems to have stabilized. The Commitment of Traders report indicated a sizeable net long position in cattle, which does leave the market vulnerable to more liquidation.

 

Hogs are oversold technically and trading at a wide discount to the cash market, but were able to ride the wave of optimism today with a huge turnaround from Friday’s trade, +1.675 (April). It is thought a good part of the short-term bearish supply fundamentals has been priced in. The Commitment of Traders Report showed funds still are holding net long positions, but long liquidation selling has reduced the size of the longs.

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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