Home Market Market Watch Closing Comments

Closing Comments

SHARE

cid:<a href=image009.jpg@01CE6CE4.660D8B30“>

 

Closing Comments

 

Corn caught the bullish vibes from the rest of the grain complex, as trade tensions seem to be abating and there is less farmer selling due to planting, +5 ¾ (Dec). EIA weekly ethanol reporting showed production down by 2.38% vs last week (for the week ending April 20th). Ethanol stocks were up 1.67% compared to last week, but down 6.74% vs last year. Corn used in ethanol production was on the light side at an estimated 102.61 mbu. Corn use needs to average 103.655 mbu to hit the USDA annual target of 5.575 bbu. Ethanol is the lowest cost octane on the market. Ethanol demand will only continue to grow globally, as both China and Japan plan to increase its use to clean up smog in large urban areas. The University of California and North Carolina State did a study that found ethanol reduced toxic auto emissions by 50%.

 

Soybeans kicked up their heels today on optimism that trade tensions with China will be resolved, +6 (Nov). Also, adding to the rally, was news of a cargo ship collision with a port in Rosario, Argentina, which will no doubt disrupt the flow of grain. This dock loaded 22% of soymeal exports last year and is expected to be down 30-40 days. No new export sales were announced this morning, making 9 days in a row with no sales to China – although, this is quite normal for this time of year. Chinese crushers are paying the price trying to avoid impending tariffs on U.S. soybeans, as they are forking over a premium for Brazilian beans. President Trump is sending over a high level delegation to the PRC, which is hoped to bring results. It does not seem that anyone stands to benefit from an all-out trade war. Also worth noting, China will be out on holiday from Thursday through Monday.

 

Wheat had a break-out session to the topside on concerns that world wheat production is starting to decline, with all varieties posting solid gains: Chicago SRW +14 ¾, Kansas City HRW +14 ½ (July) and Minneapolis HRS +8 (Sept). It is surprising that KC is not gaining more on Chicago, as KC conditions continue to deteriorate while Chicago’s have improved. The big Wheat Quality Tour kicks off on May 1st, and should bring more clarity to the situation. On the world scene, Eastern Australia is experiencing a deepening drought with another 2 weeks of heat and dryness to come.

 

Live Cattle showed strength into the close, +.525 (June). The warm weather forecasted for the next several days should encourage grilling. Supporting the bounce from last Friday’s lows was a strong jump in beef prices as well as the thought that cash cattle will trade steady this week. Strong packer margins should be well supported by the upward trending beef prices.

 

Hogs traded both sides as the market demonstrated a degree of volatility, +.525 (June). Technical action and indicators have been weak. Futures and cash are starting to move closer together, but the June contract still holds a $17 premium to cash. NAFTA negotiations seem to be headed in a more positive direction, which is key to exports and the hog market. 

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.

www.waterstreet.org 
or 1-866-249-2528

 

Water Street Solutions Market Update |
Water Street Solutions® | www.waterstreet.org
| marketupdate@waterstreet.org
Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.