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Closing Comments


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Closing Comments


The day before the USDA acreage expectations report, Corn closed EVEN at 3.97 (Dec). The combination of production declines in South America, increased demand from China and potentially less domestic corn acres creates a market that could turn back higher at any time. Argentine weather continues to look dry through the rest of the week. AgroConsult estimated the Brazilian corn production at 88 million tonnes compared to the last USDA estimate of 94.5 million tonnes. EIA Ethanol reporting showed production down 10K barrels/day and ethanol stocks were also down 2%. The report was viewed positive, and ethanol blenders are seeing their highest margins in 2 ½ years. Brazil’s demand of U.S. ethanol (at very profitable levels) is also a plus.


Soybeans crept a little lower yet ahead of tomorrow, as fund managers position themselves by liquidating some of the length they have built into the market, -4 (Nov). It will be an interesting dynamic with a three-day Holiday weekend following the Report. Heavy rains on the way for the Delta region may prompt some growers to switch from corn to cotton and soybean acres. Will the planting intentions confirm the prevailing thought of increasing beans acres, and if so, by how much? The ongoing Argentina drought has caused enough soymeal indigestion to keep the market supported, as China will need to import more beans to provide crush to cover SE Asian demand.


Wheat was down across both winter and spring varieties: Chicago -3 ¾, KC –3 ½ and Minneapolis –3 ¾ (July). The strong U.S. Dollar has made it hard for exports to stay competitive on the world stage, as it has climbed back up to near 90.00. The suffering HRW belt is forecasted to receive limited rains over the next 10-14 days, while the Midwest Delta will receive heavy rains.


Live Cattle rebounded across all contract months, as the market has been searching for a low, +.575 (April). The market had a hard time finding sellers today. Futures have been at a huge discount to the cash market, due to very large supplies ahead, with June around $20, instead of the usual $11 range this time of year.


Hogs were down in April but made large advances in the following months, with April –.825 and June +2.600. The oversold technical condition of the market was finally able to give a boost. The Hogs & Pigs Report is tomorrow at 2pm and expectations include: All Hogs & Pigs 103.1%, Kept for Breeding 101.5%, and Kept for Marketing 103.3%.


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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