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Closing Comments


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Closing Comments


Corn could not stem the tide of bleeding from beans, finishing –3 (May). Corn received some surprisingly good news on the domestic side from the Report yesterday, with exports and ethanol getting a bump which led to the estimated carryout being reduced. Corn was thought to be about 200K contracts net short in positions held by managed funds heading into trading today. It is likely that farmer selling and profit-taking were the leading reasons for the correction. With regard to exports, a daily sale was reported this morning by the USDA of 260K MT to “unknown” destination. Keep an eye on NAFTA negotiations which will resume later this month, as Mexico is especially important for corn exports.


Soybeans had a rather steep correction today following the mildly bearish report yesterday, -24 ¾ (May) and –15 (Nov). Argentina is finally slated to receive some much needed rains in the near-term, and while it may be too little too late for most of the soybean crop, it still prompted bearish sentiments as fear and uncertainty have been fueling the rally. The market had become overbought, especially in soymeal which was at a record net long position held by funds, and a correction and profit-taking was in order. The focus will now be shifting to the U.S. Planting Intentions, which will be released later this month. The USDA announced a couple of sales this morning, with a reported private transaction to China for 183K MT for 2017/18 and another 205K MT to “unknown” destination for 2017/18.


Wheat could not find a story to latch onto to offset the downward pull of the other grains. Chicago SRW -10, Kansas City HRW –12 ¾ and Minneapolis HRS –7 (May). With the recent rally of wheat, both HRW and SRW priced themselves out of competitive global opportunities – higher prices are a bit of a double-edged sword. The Drought Monitor across the Plains continues to cause concerns with moisture deficits widening, and will be watched closely. Look for weekly crop condition updates to help indicate direction moving forward.


Live Cattle stabilized after a substantial drop yesterday, +1.350 (April). The USDA offered up small changes in the March Report, lowering 1st quarter production slightly as slaughter and weights have been down, and adding to large 2nd quarter production estimates. It will be a fight for cattle to sustain rallies with large numbers weakening the market.


Hogs fought back after dropping lower earlier in the session, -.225 (April). Even though technically oversold, large supplies and weights combined with trade fears are smothering thoughts of rallies. Also not helping the cause is the pork cutout, which has fallen sharply this week to its lowest level since October 6th, with bellies leading the way.

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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