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Closing Comments

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Closing Comments

 

Corn bounced around in a narrow range on either side of breakeven before finishing – ½ (Mar). Egypt was in for U.S. corn, booking an order of 115K MT for 2017/18. On the weekly USDA rolls, corn was at the upper end of the range of estimates of 1.0-1.6 MMT, coming in at 1,620,900 MT. This is the 8th week out of 10 that corn achieved over 1 MMT of weekly sales. Customers included “unknown”, Korea, Japan, Mexico and Egypt. Currently, U.S. corn is the world’s cheapest feed grain, according to AgResource. Next week, President Trump is planning to meet with senators and cabinet officials to discuss the RFS and possible changes. This will bear monitoring, as a showdown may be looming between Big Oil and Big Corn.

 

Soybeans ignored poor net export sales (due to cancellations), +4 ¼ (Mar). New crop November beans equaled Wednesday’s closing high, + ¼. Argentina weather and falling production prospects have continued to power the market, with traders buying more weather premium. China will return from their Golden Week Holiday on Monday, so it is expected that they will resume buying in earnest. The U.S. has the price advantage as Brazilian offers are around $5-6 more than shipments off the PNW. Today’s sales data featured a purchase of 106K MT to “unknown” destination, with the majority slated for 2018/19.

 

Wheat results were mixed to negative: Chicago SRW +1, Kansas City HRW –1 ¾ and Minneapolis HRS –2 ½ (Mar). Wheat is weather traded also, but stateside vs the Southern hemisphere, as the pattern does not offer much change until mid-March. As of late, the HRW belt has had a drought problem, while soft red winter has struggled with flooding. USDA weekly sales announced were right in line with estimates of 250K-550K MT at 382,500 MT. It was disappointing to not see any Egyptian business, as the U.S. is now very competitive with Russia and should be able to vie for bids. The Philippines bought the largest share of business, followed by Japan, Venezuela and others.

 

Live Cattle continued to see long liquidation in the front months, as traders pare positions ahead of the Cattle on Feed data, -.525 (April). Look for this afternoon’s report results on Monday. Supplies and weights are high, working to neutralize strong demand and rising beef prices.

 

Hogs stabilized after a big “up day” yesterday, +.100 (April). Keeping the market supported are firm pork values and a technically oversold position. The USDA Cold Storage released after the close yesterday tended bearish, with frozen stocks estimated at 567.98 million lbs, which is 8.3% higher than last year and above trade expectations of 550 million lbs.

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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