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Closing Comments


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Closing Comments


Corn broke out to a new short term high of 4.18 ½ before retreating to 4.16, +1 ½ (Dec). Weekly corn inspections were solid again, coming in at 1,465,265 MT vs estimates of 1,400,000 MT. Strong exports and tightening world inventories are providing strength under the market. Additionally, there are concerns for yield loss with a dryer trend for S Brazil’s safrinha corn. The corn volatility cash index has gone from around 12 to 21 since April 13th. What does this mean? Volatility is needed in order to get market opportunities, and last year volatility peaked in early July around 37. Look for crop planting progress later this afternoon. It is expected that the range will be 15-20% completed. According to a meteorologist interviewed by Ag Day, long periods of heat and dryness are not to be expected this season across the Corn Belt.


Soybeans traded in a wide range, hitting 10.57 ¾ before plummeting back to 10.44 ¾, -2 ¼ (Nov). Early gains were boosted by soymeal, which continues to benefit from the port accident story in Rosario, Argentina, last week. Soybean weekly loadings were better than predictions, as they were pegged at 679,379 MT for the week of April 26th, compared to expectations of 400K MT. Argentina also posted a daily private sale of 120K MT of U.S. beans for 2018/19. Argentina’s shortages this year and purchases from the U.S. have helped fill the gap from lacking Chinese interest due to the trade war. Speaking of the PRC, trade uncertainty is still acting as a check and balance to rallies until further progress is made between the two sides to resolve the tariffs. Will we get more than just an extension when trade representatives meet in Beijing this week?


Wheat gapped higher in Chicago wheat at the overnight open, and was able to maintain a double-digit gain, +12 (July). Kansas City was +7 (July) and Minneapolis +5 ¾ (Sept). Some of the gains may be the result of short-covering at month-end, as well as deepening drought in the Western U.S. Plains and the Black Sea region. The weekly export inspection log was disappointing, as it showed wheat loadings at 376,256 MT compared to estimates of 450K MT. Look for crop condition ratings later this afternoon to influence trade to follow. The hard red winter wheat tour starts tomorrow. Minneapolis seems to have gotten past the negative Stats Canada acreage report, which showed more spring wheat than expected. However, the market had fallen 35 cents prior to that and much of that acreage was already built-in to the price.


Live Cattle and feeders set back today, although the overall trend is still in an upward direction, -.900 (June cattle). Buyers were very active at the end of last week with cash cattle trading $3 higher in TX, KS and NE. Underpinning the market are very good packer margins and a strong beef market.


Hogs were mixed with May and June positive but July and August negative. June finished +.075. Hogs seem to be hunting for a short-term low, as they are technically oversold. Hogs need positive news to reverse sentiments, i.e. a quick resolution to NAFTA! Stay tuned . .


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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