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Closing Comments


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Closing Comments


Corn continued to extend its correction, with May –4 and Dec -2 ½. Farmers have been selling into the rally, keeping the pipeline well supplied. Every weekend seems to be centered around weather, so stay tuned for any changes to Argentina’s forecast. While Argentina is not a large corn producer, reductions to their yield potential are still felt due to the strong demand underlying the market. The Rosario Exchange has downgraded their corn production estimate to 32 MMT from 35 MMT, with last year coming in at 40 MMT. Brazil seems to be in better shape than their South American counterparts. Other factors affecting the CBOT include ongoing NAFTA negotiations, ethanol and the RFS debate on Capitol Hill, as well as anticipation of month end stocks reporting and acreage intentions. Look for the Commitment of Traders Report later this afternoon to shed light on managed fund positioning.


Soybeans were able to gain more length, with May +8 ¾ and Nov +7 ½. The Argentina story and the continued reductions of soybean harvest estimates by crop scouts and traders have supported the premium built into the market. This is an important time for pod filling, and dryness has persisted over critical Argentine growing areas. As with corn, attention is shifting to the end of the month acreage intentions and ending stocks reporting. The only announced sale on the books for today was a private transaction reported by the USDA of 20K MT of soyoil to “unknown” destination.


Wheat found weakness in the winter varieties, with a wet weather forecast due for KS and NE dampening the market: Chicago SRW –11 and Kansas City HRW -14 (July). From a technical chart perspective, it is hard to take away any positives from recent action. Crop conditions have improved by double digits this month, and it is thought that there has also been some pressure applied from a good amount of farmer selling. Russian prices have setback a bit this week due to a declining Ruble and improved logistics. However, USDA export sales data this week underperformed, as U.S. prices are some of the highest, giving less chance to compete for incremental global business. Minneapolis spring wheat ended –3 ¼ (July).


Live Cattle pushed lower on follow through selling, with June now trading below the 200-day moving average. April also saw losses, finishing the session -.600. Record large 2nd quarter production is weighing heavy on the market. On a positive note, USDA weekly export sales yesterday showed good results, and total exports for the year are now 16% over last year. WASDE’s latest annual beef export estimate is predicting record large results at 3 billion lbs.


April Hogs look to be searching for a bottom, as they continue to leak value, -.275. April hogs are at the lowest value since August 30th. All months battled back from early session lows to finish with less in the loss column. In addition to high weights and slaughter, market weakness is being provided by slower than expected retail demand on the East Coast.

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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