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Closing Comments

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Closing Comments

 

Corn is struggling to get past resistance amid farmer selling on rallies, + ½ (Mar). Beans and the macro environment provided support with crude recovering from the overnight, the Dollar near lows and the DOW up. USDA weekly export sales announced this morning were particularly strong for corn, with a combined 2,071,900 MT for 2017/2018 and 2018/19. Expectations were in the range of 1.0-1.6 MMT. Corn is catching up with last year’s sales with no signs of slowing down, as the sales deficit to last year is now around 14%. Buyers this week included Japan, “unknown”, Mexico, Colombia and Saudi Arabia.

 

Soybeans shrugged off smaller NOPA crush numbers than expected (crush was still record large for Jan) as traders continue to build in more South American weather premium, +7 (Mar). Beans were also above the range of estimates for weekly export sales, coming in at 837,500 for 2017/2018 and 2018/2019 vs. estimates of 400K-800K MT. This puts soybeans at a level of 13% behind last year’s exports. January NOPA crush was reported at 163.11 mbu vs. estimates of 165.6 mbu and last month’s 166.305 mbu. Soyoil stocks were higher than expected at 1.728 billion lbs vs. 1.60 billion lbs. Soymeal exports were seen at 860,416 MT compared to last month’s 921,726 MT. (NOPA crush data only includes NOPA member firms and not the total U.S. crush data)

 

Wheat was able to move forward after the market digested the CME increased margin requirements: Chicago SRW +6, Kansas City HRW +8 ¼. The focus is turning back to weather, as the updated NOAA drought monitor is unchanged, with HRW growing areas still very dry. Keep a close eye on the weather maps over the next 4-6 weeks. Wheat found the upper end of the range of weekly export estimates of 250K-500K MT, as the USDA pegged them at 421,900 MT. Wheat sales are running 12% behind last year. Minneapolis spring wheat had a modest gain, but is still stuck trading in a sideways range, +4 ¾ (Mar).

 

Live Cattle pushed up into new highs as very robust demand is winning the battle against increasing supplies, +2.025 (April). Futures are trading at a premium to cash, as action today is also well above both the 100 and 200-day moving averages. Positive action in the financial markets was also influential.

 

Hogs took the opposite direction of beef, with all contract months showing declines, -.925 (April). The CME Lean Hog Index, which has been running at a significant premium to April futures, also setback yesterday to 74.30. Average weights remain well above last year and average, which is a bearish force. However, technically the market is oversold, which may encourage a further bounce.

 

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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