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Closing Comments


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Closing Comments


Corn eked out a small gain, finding technical support, +1 (May) and +1 ¼ (Dec). USDA Weekly Export Sales will be delayed until tomorrow by a temporary shutdown of government due to weather. Managed funds have continued to build a large net long position in corn, estimated at over 220,000 contracts. From a chart perspective, the market has now moved back to a 50% retracement of the entire move up from December to March. Acreage intentions, trade wars, and planting season will all have something to say in the very near future, with next Thursday featuring important USDA data. Yesterday’s weekly ethanol report was supportive, and that has been followed by news from a Chinese State source that they expect domestic ethanol production to rise by 500K MT this year.


Soybeans traded both sides as fears of trade retaliation from China is reaching a crescendo, EVEN (May) and + ½ (Nov). It has been reported that President Trump is set to announce at least $50B in tariffs on the PRC and to add restrictions on technology transfers and acquisitions by Chinese firms. This has been viewed as intellectual property theft, and Trump aims to level the playing field. It is the right time of the year for China to lash out at soybean exports, with Brazil set to deliver another bountiful crop. It would not be a long-term situation, as China does not want to rely entirely on Brazil and Argentina for their needs, but they could try to make it painful for the U.S. in the near-term.


Wheat found support in selling exhaustion yesterday and reports that India’s production is dropping due to adverse weather. The winter wheats finished in July, +2 ¾ (Chicago) and +6 ¼ KC. India’s decline could result in India importing 2-4 MMT of wheat this season. While TX, OK and KS have wet weather in the forecast, the Drought Monitor is still of concern across the Plains. Look for long liquidation to likely subside in the near-term, as the market is looking for fresh news from next Thursday’s Report. Minneapolis spring wheat finished strong, +2 ¾ (July).  


Live Cattle is searching for a short-term low, as the market was able to reverse course after several consecutive days of sharp losses, +.450 (April) and +1.025 (June). Traders have been in long-liquidation mode, as managed funds were over 100K contracts net long in last Friday’s COT report. The Cattle on Feed Report is tomorrow with March placements estimated at 104% of last year, marketings 101% of last year and On Feed 108% of last year. USDA Cold Storage is scheduled for this afternoon.


Hogs made a strong move lower today when it looked like the market may have been trying to put in a short-term low, -1.250 (April). Technically, the market is extremely oversold, which may provide impetus for a recovery bounce in the near-term. Hog weights are well above last year, and severe weather on the East Coast and South are not helping demand however.

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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