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Closing Comments


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Closing Comments


Corn was able to follow soybeans higher, with competing influences trying to sway the market, +2 (May) and +1 ¾ (Dec). The Commitment of Traders Report on Friday showed managed fund investors building more net length into their corn position by 40,000 contracts, as of last Tuesday. The market is acting a bit toppy with the CBOT overbought in general, but Argentine weather and solid demand underpinning the market are winning so far. USDA weekly export data showed inspections for the week ending March 1st at an underwhelming 947,642 MT compared to estimates of 1,250,000 MT. Look for Thursday’s USDA Report as the next important opportunity for direction.


Soybeans saw traders buy more premium coming out of the weekend, +6 ½ (May) and +5 (Nov). The competing factors of Argentine drought, talks of trade wars, and lagging exports vied for attention. Not to mention, the Commitment of Traders Report showed soymeal in a new record long position among fund managers at 106,000 contracts. Soymeal has been leading the soy complex rally, and continued to churn out modest gains today, while soyoil declined. However, there are serious concerns as to the recent trade posturing made by the President regarding steel and aluminum tariffs and how China will respond. The PRC is likely to try to hit the U.S. where it hurts among the President’s base, which includes rural and farming communities. Weekly inspections reported this morning by the USDA showed soybeans above expectations, coming in at 990,113 MT vs. estimates of 800K MT.


Wheat was buoyed by continued U.S. Plains weather concerns, especially in hard wheat (high protein) country. According to the COT report on Friday, Chicago wheat still holds a fairly significant net short position of over 60,000 contracts, leaving room for short-covering. With regard to Kansas City HRW, concerns of reduced yield from the dry weather are becoming more of a reality. Some analysts think in a worst case, production may only be half of two years’ ago. For exports, the rising prices here make it harder to be globally competitive, even though Russia’s prices are up. Weekly wheat loadings were well above estimates, according to USDA inspection data. They were pegged at 400,937 MT for the week ending March 1st vs. estimates of 300K MT. Chicago +9 ¼, Kansas City +11 ¾ and Minneapolis +3 (May).


Live Cattle traders returned from the weekend in the buying mood, +1.050 (April). The saga continues with competing large supplies and strong demand, against a backdrop of looming trade wars and stock market volatility. How much of the trade posturing will materialize is yet to be seen, but the President’s strong stance is causing an unsettled feeling in the Ag sector. Leading into today, cattle futures have declined in six of the last eight trading sessions.


Hogs also showed positive gains and a recovery bounce, +1.225 (April). Pork prices late last week showed improvement. Like the other Ag sectors, fear of trade wars and a NAFTA impasse are on the minds of many with pork so dependent on exports. NAFTA negotiations will resume mid-month.

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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