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Closing Comments


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Closing Comments


Corn saw its share of profit-taking today heading into the weekend, -2 ¾ (Dec). Two of the main topics on the minds of traders include spring planting and trade wars. The bias is higher, with less acres, strong demand, and much uncertainty with the whole growing season ahead. However, the ride could be bumpy with extreme volatility, considering all the underlying political variables with China, Russia and others. Many have been somewhat surprised by the lack of rally of CBOT corn, but Brazil is now cheaper than the U.S. Gulf, and they are going after the business. The Commitment of Traders report will be released this afternoon, so look for results in Monday’s commentary.


Soybeans also succumbed to profit-taking and a risk-off posture heading into the weekend, -4 (Nov). While fundamentals are tending more bullish, traders are wary of the unpredictability of potential weekend tariff announcements and weather pattern changes. Surprisingly, there also were no new bean export sales announced this morning. Brazilian FOB soybean basis has corrected from $1.95 last Friday to $1.30 while the U.S. FOB is $.92 over. With the spread much narrower, EU crushers are less interested in the U.S. beans now, as they would prefer Brazilian beans with higher soyoil content. In ethanol news, President Trump seems to be indicating he is open to waiving RVP for E-15, which would allow it to be sold year around across the country without condition. A new policy would still need to be adopted by retailers and with accompanying infrastructure in place to implement – which could take years to be fully operational.


Wheat is down on dampening optimism, as the next 14 days offer three different storm systems moving through the Plains and Midwest. Snow will be part of the mix as some areas could receive over 20” of snow! Cool and wet weather should last well through April. Chicago filled the gap left on the chart, dipping below the 200-bar moving average. Wheat just does not have much positive news to latch onto in the wake of the bearish Tuesday Report. And, Russia’s exports keep swelling to higher levels, with IKAR upping their estimate from 38.5 MMT to 39.5 MMT. Results today included: Chicago SRW -9, Kansas City HRW -11 (July) and Minneapolis HRS -6 ¾ (Sept).


Live Cattle showed a mostly positive bias across contract months today after a strong showing yesterday, with June down slightly -.050. Exports reported yesterday were positive, as they are running 33% over the four week average, and 16% over last year. This is needed in order to keep up with strong 2nd quarter production numbers, which will be the largest increase over the 1st quarter since 2006.


Hogs stayed positive, reaching higher at the close, +.400 (June). Export sales announced yesterday were a bit light in comparison to recent weeks, but still respectable. Not helping the total, China canceled 3,700 tonnes, likely in response to tariffs. The trend has definitely been for higher, after the low was put in place on April 4th. Watch the wide basis in June to possibly limit upside action.

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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