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Closing Comments

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Closing Comments

 

Corn was able to diverge from beans’ negative direction, +1 ¾ (Dec). The Commitment of Traders Report last Friday showed fund managers had lightened their long position by 37,000 contracts. This coupled with positive fundamentals and strong demand boosted the mood of investors. USDA weekly export loading data for the week ending April 19th was strong, as inspections were pegged at 1,719,025 MT vs estimates of 1,450,000 MT. It is hard to conceive that the market has reached its high for the year with planting and pollination ahead. Look for Crop Condition reporting later this afternoon, as expectations are for planting to be running behind. In South America, the Brazilian safrinha corn crop looks to be receiving little to no rain the next two weeks, so this will be closely monitored for potential yield reductions.

 

Soybeans shed length with red numbers to start the week, -6 ¾ (Nov). Weekly export inspection data showed beans a little off expectations of 500K MT, coming in at 470,817 MT. There were no new daily sales announced for the 8th consecutive day. Adding to the heavy atmosphere, the Commitment of Traders Report data from last Friday afternoon showed managed funds had added to their net long position to the tune of 17,000 contracts. New buying is hard to come by. Soybeans need a fresh story, and without one all attention is focused on trade tensions with China and positive trending weather in the States.

 

Wheat was a tale of two different varieties, with the winter wheats mixed to negative, but spring incurring significant losses. Chicago SRW -2 ¾, Kansas City HRW + ¾ (July) and Minneapolis HRS -9 (Sept). While there were weekend rains that covered parts of HRW country, it was not enough to take the pressure off. Weekly USDA inspections were solid, coming in at 619,251 MT compared to ideas of 450K MT. Winter wheat conditions will be released later this afternoon, so watch closely to see if further deterioration of HRW is noted. There is chatter that a good chunk of S. Kansas, W Oklahoma and Texas Panhandle acres will be written off by claims adjusters. Stats Canada will be coming out with their first stab at acreage estimates this Friday.

 

Live Cattle was able to entice buyers following a non-bearish Cattle on Feed Report Friday, +1.150 (June). Cattle on Feed were at 107% of last year vs expectations of 108%, feedlot placements were seen at 91% vs expectations of 90% and marketings were right in line. Will June/Aug cattle be able to get back to the $110 level and offer a hedging opportunity? The COT Report showed funds have continued to pare down their net length, down to around 22,000 contracts, which is the lowest since July 2016.

 

Hogs slipped lower today, as packer margins are down and industry expansion is moving full steam ahead, -1.175 (June). Grilling season being delayed by a cold spring has not helped. Futures are way too far out in front of the cash market, with the June contract at almost a $21 premium. Sluggish export demand needs to pick up soon, as technical indicators are indicating the market is overbought.

 

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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