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Closing Comments

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Closing Comments

 

Corn prices closed lower on the day due to the Chinese tariff announcement, but well off of the emotional lows made in the overnight session.  Settling down .07 ¼  in new crop at 4.05,  corn was not spared in the tariff announcement from China. It will be several weeks or possibly months before anything is implemented, if it even takes place.  It sounds like negotiations have already begun around the trade deficit.  What has not changed from yesterday is a poor beginning to spring field work and planting, plus the lost in acres.  End users have been bargain hunting in today’s action.     

 

Soybeans took the brunt of the tariff announcement and immediately sold off close to .50 in the overnight session.  Again, well off the lows, soybeans settled down .23 ¼, at 10.19.   Interesting to think China gets a big discount today as prices sell off dramatically but no actual action has taken place and will not for the near future.  Basis in has soared to +1.25 – 1.30 over which compares to the US Gulf of +.76.  The increase has pushed non-Chinese buyers to the US.  A reminder that global demand remains strong.             

 

Wheat is clearly still reeling from the poor conditions in the plains as they closed with mixed settlements in the different classes.  Chicago closed down.01, KC closed up .01, and Minneapolis markets closed down .03 ¼.  High protein wheat was added to the list of US goods that would be involved with the tariffs, but weather currently dominating trade still.

 

Live Cattle closed the day up 2.70 in June and 1.05 in April.  After trade concerns with China hit the grains, the cattle markets were also involved and pushed contracts into gap lower on the charts.  The stronger close however signals that we are due to have a bounce and looks to have begun.  Fundamentally, Hong Kong does not appear to be involved in the US or Chinese tariff announcements and most US beef exports have ended up there recently.    

 

Hogs finally put in a long awaited rebound today closing up around 1.60 in most months.  Smithfield Foods does not look to be impacted by these trade tactics as it would be expect that China would not tax their own operations.           

 

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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