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Closing Comments

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Closing Comments

 

Corn gained in old crop and matched yesterday’s new crop high of 4.00 Dec, with March finishing +2. The USDA reported a private sale of 130K MT of corn to “unknown” for 2017/18. The Ag industry is waiting to with bated breath for the initial results from talks today between President Trump and high-ranking Senate and Cabinet member’s discussion of possible changes to the RFS. The idea behind the changes would be to lower costs for refiners to comply with biofuel mandates. Ag is concerned with potential weakening of corn based fuel ethanol blending requirements. Any amendments will need to go through Congress, so will be an ongoing power struggle between Big Oil and Big Corn.

 

Soybeans continued to push higher fueled by soymeal and the Argentine drought, +3 ¾ (Mar). Yesterday’s reversal action provided some concern, and technically, the grains are overbought. But until the South American story changes, look for traders to build in more premium. As Argentine farmers get into the fields, abandonment of acres could become a focus, further decreasing yield prospects. On the other hand, Brazil’s soybean yield prospects continue to grow. Farmers there are still undersold (40% sold) due to the unfavorable Real currency.

 

Wheat traders continued their short-covering amid weather concerns and dryness across the U.S. Central Plains, +11 ¼ (Kansas City HRW). Chicago SRW and Minneapolis HRS finished +3 ¾ and + ½ respectively (Mar). Winter wheat crop conditions released yesterday reinforced the notion that weather is playing an important role in market direction at this point in the season. Results included: KS 13% very poor, 36% poor, 39% fair, 11% good and 1% excellent; CO 5% very poor, 22% poor, 42% fair, 28% good and 3% excellent; IL 8% very poor, 8% poor, 39% fair, 40% good and 5% excellent; NE 0% very poor, 5% poor, 52% fair, 38% good and 5% excellent.

 

Live Cattle corrected after yesterday’s losses and were able to stay above the 100-bar moving average, +.250 (April). With beef prices at the highest level since last July, it is safe to say that demand is very strong.

 

Hogs showed indecision and mixed results, with April FLAT. It is the same story of strong demand but concern regarding large supplies ahead that is keeping the market somewhat in check.

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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