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Closing Comments


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Closing Comments


Corn benefitted from wheat’s strong performance with May +2 ¾ and December +1 ½. Yesterday’s talks between Trump and lawmakers regarding U.S. biofuel policy did not yield big results, as this will likely be ongoing. On that topic, EIA Ethanol data released today showed production down 2.25% compared to last week, but up 0.97% over last year. Ethanol stocks were up 0.99% over last week but down 0.49% vs. last year. Corn used for ethanol was a solid 108.6 mbu, above the 103.053 mbu average needed to meet the USDA annual projection.


Soybeans continued the recent trend of strong gains in the old crop months, while new crop followed at a much slower pace. May soybeans were +6, while November soybeans were + ¼. The main part of Argentina’s growing area, which includes Santa Fe and Cordoba, will stay hot and dry into the March 10th timeframe. In Brazil, the opposite problem exists as rainfall delays are starting to create concerns about the soybean harvest. This may make it difficult for Brazil to beat last year’s record crop. Exports got a boost this morning from an announced 250K MT of beans to “unknown” destination for 2017/18.


Wheat went “through the roof” today, led by Chicago, +18, with Kansas City not far behind, +17 ½. Chicago wheat still has a large block of net short positions in managed funds’ portfolios, which leaves room for short-covering amid first notice day and option expiration. Minneapolis spring wheat joined the party, +12 ¾ (May). Wheat basis has spiked across the Plains since early winter, which provides support for the CBOT. There is also chatter of an impending order from Iraq for U.S. wheat of an unspecified amount. Weather continues to be of concern, mostly in HRW country but also affecting the Chicago variety.


Live Cattle dipped to a new short-term low below the 100-day moving average, -.975 (April). With large supplies looming in the next quarter, it is hard to envision a bullish scenario, as there is significant downside risk.


Hogs fell sharply led by April, -2.725. The deferred months followed, but at a less severe decline. With belly values falling this week, talk of strong export demand and profitable packer margins is taking a back seat. Watch for action the next several sessions to indicate whether this is the resumption of a downtrend.


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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