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Closing Comments


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Closing Comments


Corn was propelled forward today by strong export sales and positive action in wheat, +2 ½ (Dec). The USDA reported weekly export sales at 1,069,200 MT, on the very high end of the range of estimates of 650K-1.1 MMT. World weather is offering a bullish slant with Ukraine and Russia light on rain with excessive heat and S Brazil laboring under dryness in Parana which could cause a yield decline. Traders are also closely watching NAFTA negotiations, which have a mid-May deadline to find a resolution. Things have been looking more positive on that front, but still cause for unease. The next important date on the calendar is May 10th and the WASDE Report.


Soybeans were able to overcome pessimistic mindsets over trade, up over 11 cents the last thirty minutes of trade, +8 ¾ (Nov). The U.S. delegation to Beijing has been in deliberations since yesterday with their Chinese counterparts, and there is hoped to be some kind of word soon on results. The main issues being discussed are the trade deficit of $550B, intellectual property theft and access to financial markets. USDA weekly exports were on the high end of expectations, with the total split fairly evenly between 2017/18 and 2018/19. Sales were pegged at 886,200 MT compared to the range of expectations of 450K-900K MT. There were no new soybeans sales this morning, but Peru booked a private purchase of 30K MT of soyoil for 2017/18.


Wheat was strong into the close with Minneapolis spring joining the winter wheats in the green. Wheat has been driving corn, as weather has been leaning bullish, with U.S. Plains hard red winter under pressure, Australia very dry and the Black Sea Region of Russia and Ukraine well below normal precipitation with hot temps. This has caused managed funds to build some premium into their net short position in wheat. The Wheat Tour is continuing to show low yields and stunted development in height and head size with poor root systems – Kansas, Nebraska and Colorado all showed decreased potential. On the bearish side, next week could bring a downward adjustment to wheat exports in the WASDE Report, which would also increase ending stocks. However, this week’s sales were very respectable at 445,100 MT vs estimates of 100K-600K MT. Chicago SRW +11 ¼, Kansas City HRW +12 ½ (July) and Minneapolis HRS +3 ¾ (Sept).


Live Cattle picked up what it lost yesterday, as futures continue to trade in a sideways range, +1.675 (June). Beef values are the highest since last June. Is the market underestimating the strength of demand?


Hogs showed early enthusiasm before running out of buyers, EVEN (June). As with beef, demand is providing support under the market. This coupled with declining seasonal supplies should help neutralize higher production. Technically, the market appears oversold. If good news comes from NAFTA in the next few days, look for an opportunity for a bounce.

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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