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Closing Comments


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Closing Comments


Corn saw more profit taking today as the attention is shifting from drought problems in Argentina to the U.S. acres and planting season. It is estimated that funds liquidated 25,000 corn contracts yesterday, leaving them about 215,000 contracts net long. Most analysts seem to be in agreement that corn acres will shift lower this year, with AgResource the latest to give an estimate of 89 million. Planting in southern states is slightly ahead of a year ago, with Texas leading the way at 35% complete and due to the dry soil conditions. The USDA reported a private sale of 110K MT of corn to Peru for 2017/18. Ethanol producer margins have been able to stay in the black at about 5-10 cents/gal. China will be upping their ethanol blending requirements with an E10 mandate deadline of 2020.


Soybeans shed a large amount of length yesterday but were able to stabilize today. The action left some befuddled, but likely it was a combination of profit-taking with balancing of excessive length and HRW wheat getting precipitation relief. Other factors hanging over the market include fears of trade retaliation from China, lower protein exports from the U.S. vs Brazil, and a stricter foreign matter requirement slapped on the U.S. compared to the competition. Global and domestic stocks are more than adequate despite the Argentina drought and most are expecting soybean acres to increase stateside.


Wheat was also able to level out after yesterday’s blood-letting in the winter varieties. Yesterday’s condition ratings were viewed as friendly, and the recent rains in the Plains have been factored in. From a seasonal perspective, wheat does not have a history of rallying in March, so watch to see if this trend can be reversed. Also not helping wheat’s cause, is the fact that the U.S. is priced well above its competitors currently, which is not helping export sales. Recently, Australia was $26 better for an Iraqi tender.


Live Cattle showed indecision today with early losses followed by a slight rebound off the lows, with 2nd quarter production increases and supplies on the minds of many. The Cattle on Feed report later this week should help bring more clarity, as the last report showed feedlot supplies up 7.9% up over last year. As with the grains, concerns over trade wars and a decline in exports are also weighing on the market.


Hogs were mixed in trading today, with selling pressure applied early on in the session. The market has seen a sharp drop since highs reached in late February. Will spring demand be able to neutralize the large short-term supplies? With exports to Mexico and others being so vital to pork, uneasiness over NAFTA and other trade alliances have added to the bearish mood. 


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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