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Closing Comments


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Closing Comments


Corn fought to a near draw today after trading both sides of unchanged, + ½ (Mar). Providing support was an announced private sale of 123K MT of corn to “unknown” destination for 2017/18. However, weekly EIA ethanol production numbers were down this week by 3.88% from last week and 2.31% from last year. This is the lowest weekly production number of the year and second lowest since October. Ethanol stocks for February 9th were also down from last week by 2.57%, but up over last year by 1.71%. Corn used for ethanol was pegged at 105.66 mbu, which is still well ahead of the 103.536 mbu needed on a weekly basis to hit the USDA yearly projection. And, ethanol margins are trending positive with average Midwest plant margins running at $.13/gallon.


Soybeans continued their trek up powered by soymeal gains and continued concerns over Argentine weather forecasts, +5 ½ (Mar). March futures reached a high not seen since December 7th, and rose above trendline resistance. In Argentina, the majority of the soybean growing area is slated to receive less than an inch of rain over the next 10 days. Commercial meal end users have been caught short on their supplies, forcing them to chase a rallying market. On the export sales front, there were no new sales reported today. Look for NOPA Crush data tomorrow late morning.


Wheat played the spoiler role today, as there is not enough of a story to entice buying optimism in spite of a declining Dollar. The winter wheats finished: Chicago –5 and KC -4 ¾. Minneapolis spring wheat finished -1 ½ (Mar). Yesterday, Chicago wheat was able to trade into new highs before finishing with a loss on the day. This negative technical momentum carried over to today’s session. Also, providing a drag on the market was the CME’s decision to raise margin requirements by $50/contract. Why is this normally done? The answer is usually to slow down trade, which is not helpful to positive price movement. It will be important to continue to monitor weather across the HRW belt, as much of the area is forecasted to remain dry.


Live Cattle had an inside trading day, and managed to forge a modest gain, +.450 (April). In the short-term, growing supply continues to battle with firm demand. Boxed beef values are down from last week and slaughter is up by 1,000 head from same week last year.


Hogs experienced volatility with a large chart bar reaching up to the 200-day moving average, +1.225 (April). The market seemed somewhat poised for a recovery bounce, with the market being extremely oversold this week. April futures are trading at a significant discount to the cash index compared to the five-year average. Hog slaughter is up by over 50,000 head week-to-date compared to last year same time.


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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