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Closing Comments

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Closing Comments

 

Corn traded within less than a 3 cent range today, +1 (Mar). Providing a boost was an announced sale of 130K MT of corn to “unknown” destination for 2017/18. EIA Ethanol results from the weekly reporting showed production up 5.12% compared to last week and 3.29% over last year. Ethanol stocks were down slightly by 0.58% compared to last week and up 0.37% vs. last year. Corn used for ethanol was a solid 111.12 mbu, well over the 103.257 mbu needed to meet the USDA annual projection of 5.525 bbu. The USDA Ag Outlook Conference gave initial ideas with regards to 2018 acres – they pegged corn at 90.0 million acres which is down slightly from last year’s 90.167 million. The 2018/19 average farm price is predicted to be $3.40/bushel vs. $3.30/bushel in 2017/18.

 

Soybeans bounced back and forth from negative to positive, +2 ¼ (Mar). South American weather is virtually unchanged, and the markets received a bump from a weak Dollar. The USDA also reported a sale of 110K MT of soybeans to “unknown” destination, with the majority of the order slated for 2018/19. The USDA Ag Outlook provided a window into their view of soybean acres for 2018, as they see 90.0 million compared to 90.142 million last year. The 2018/19 average farm price is predicted to be $9.25/bushel vs. $9.30/bushel in 2017/18. If soybeans are able to maintain the current pricing ratio advantage over corn, it is likely there will be a bigger shift of corn to beans acres, as the majority of farmers are showing greater bean profitability in this tight margin environment.

 

Wheat led the grains today, correcting from its recent dip into a new short-term low, +4 (Chicago). Kansas City HRW and Minneapolis HRS were both up, +5 and + ½ respectively (Mar). The weak Dollar also benefitted the wheat complex, as Russian prices have recently risen to levels that are now vulnerable to competition. With regard to the USDA Ag Outlook forum’s view on 2018 all wheat acres, they are expected to be up slightly over last year at 46.5 million vs 46.012 million. The 2018/19 average farm price is predicted to be $4.70/bushel vs. $4.60/bushel in 2017/18.

 

Live Cattle and Feeders continued to succumb to sellers, -.850 (April cattle). It is thought that funds may be sitting out due to the large supply fundamentals ahead. Friday’s Cattle on Feed Report will be key to direction. Is the market forming a significant top?

 

Hogs were able to keep the positive momentum of the last couple of session alive, +1.375 (April). The market is oversold technically which is aiding the bounce. However, some caution is warranted as supplies and weights are up from average levels and overall meat supplies are growing.

 

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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