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Closing Comments

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Closing Comments

 

Corn was not offered any exciting news today, as profit-taking and selling prevailed. While ethanol numbers were supportive, the market still managed to leak out some gains, -2 (Dec). EIA Ethanol data released today showed production for the week ending April 6th down 0.39% vs last week and up 4.87% compared to last year. Ethanol stocks were down 2.58% from last week and 4.62% from last year. Corn usage for ethanol was estimated at 107.76 mbu which is well above the 103.677 mbu average needed to achieve the USDA annual projection. Last Friday showed record ethanol exports of 219 million gallons with a large discount to Brazilian prices. Additionally, President Trump has indicated he wants to delay any biofuel policy changes for several months, likely due to trade uncertainty and growing producer anxiety.

 

Soybeans faltered at the finish after getting a boost from exports, -1 ½ (Nov). The USDA reported two private sales this morning – one to Mexico for 141,518 MT for 2018/19 and another to Argentina for 120,000 MT for 2018/19. This is the first sale to Argentina of soybeans since 1997-98, per the USDA. U.S. beans are the world’s least expensive, and more sales are expected to follow to Argentina, Europe, Egypt and China. U.S. and world stocks are lower than expected per the Report yesterday. Also worth noting, the USDA did not adjust soybean exports lower despite the ongoing trade dispute with the PRC. While the market needs to add premium for weather before planting gets into full swing, cold weather in the Northern Plains could actually result in an increase in soy acres, with producers switching acres from spring wheat.

 

Wheat struggled to gain positive footing today after the less-than-friendly Report yesterday. The winter wheats both were under pressure, with Chicago –4 ¼ and Kansas City –4 ¾ (July). However, providing a measure of support was a declining U.S. Dollar. World wheat stocks are up to a record level, and the U.S. has had trouble competing on price on the world stage, with Russian wheat exports upped to 38.5 MMT from 37.5. On the other hand, spring wheat has a glimmer of hope, as it appears less acres will be planted due to the persisting cold and snow in the Northern Plains. Momentum indicators are overbought for Chicago and KC – are we reaching a top?

 

Live Cattle was mixed, trading sideways after recovering from a new low achieved last week, -.525 (June). It is the same story of extremely large supplies weighing down the market, stifling any attempts at a rally. Beef production is expected to increase from 1st to 2nd quarter by the largest amount since 2006.

 

Hogs were able to find modest gains, as some of the fears related to less exports to China seems to be wearing off, +.725 (June). Also providing support is USDA data showing a larger decline in production from the 1st to the 2nd quarter than expected. However, buying is being checked by the large discount of cash to the June contract.

 

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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