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Closing Comments

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Closing Comments

 

Corn was able to rebound over four cents off its lows and finished, + ¼ (May) and + ½ (Dec). Today saw profit-taking early, as traders seemed to be a bit hesitant after digesting the net long COT Report and upcoming rains scheduled for Argentina. The rain in Argentina may be too little too late and the coverage insufficient to reverse damage done to the corn crop. Corn got a boost from daily export sales with two reported transactions by the USDA this morning – 254,800 MT to “unknown” destination and 107,752 MT to Japan for 2017/18. Weekly inspection data was also strong, showing 1,376,999 MT vs. estimates of 1,100,000 MT. For the year, corn exports are still lagging last year by 30%. Lawmakers will meet again today with Big Corn and Big Oil representatives to further discuss the Renewable Fuel Standard and RINS – stay tuned.

 

Soybeans were able to turn losses from the overnight into gains, +1 ¾ (May) and +6 (Nov). The Commitment of Traders Report showed beans and meal also very net long among managed funds. The Argentine drought has been of historic proportion for beans, but most of that premium has now been built in. All the focus is now shifting to the U.S. season and acreage intentions. USDA weekly loadings were above expectations, coming in at 910,237 MT compared to estimates of 800K MT. There were no new sales reported this morning, and bean exports are still running 12% behind last year. U.S. soybeans are cheaper than Brazil, which should boost demand well into the spring. Investors are still on pins and needles awaiting China’s retaliatory response to recently announced U.S. steel/aluminum tariffs.

 

Wheat rebounded substantially off its lows in the overnight, with Chicago +1 ½ (July). There is not much news for the wheat complex to latch onto, with rains in the forecast for the U.S. Plains and plenty of supplies globally. Weekly inspection data was over expectations for wheat also, with an announced 389,358 MT compared to thoughts of 350K MT. Wheat is still running 7% behind last year, and this may require WASDE to make a downward revision to export estimates in the future. Look for winter wheat condition updates later this afternoon, which are expected to show minor improvement over last week. Kansas City HRW and Minneapolis HRS finished +1 ¾ and +7 ½ respectively.

 

Live Cattle has been struggling with positive and negative market forces of late. The cash cattle market has found support in strong consumer demand and exports, while the large production increases expected in the 2nd quarter has put a damper on rallies. The COT report showed non-commercial traders to have liquidated 8,248 of their long positions, which now total 113,323 contracts. April Cattle finished the session, -1.575

 

Hogs continued their steep descent, led by the deferred months. April was off -.175. Although, there is large supply, positive factors are also at work including better than expected monthly export data, news that Mexico and Canada will be exempt from tariffs, and a technically oversold position. The COT showed non-commercial traders had shed 2,991 of their long positions, leaving them net long 21,923 contracts.

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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