Closing Comments

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Closing Comments


Corn found itself between the competing forces of positive beans and negative wheat, – ¼ (Dec). USDA weekly inspections announced this week were in-line with expectations, coming in at 1,554,495 MT vs estimates of 1,600,000 MT. This afternoon’s planting progress update will be closely watched, as it is thought that there is yet 35 million acres (40% of crop) to be planted. Tomorrow is May 15th, and as is commonly known, yields of corn planted after this date tend to lag earlier planted crops. However, there is nothing currently on the radar to suggest that summer forecasts will be anything but normal and conducive to another bountiful harvest. However, there could still be a transfer of some of these planned corn acres to beans, as the next 7-10 days will be critical.


Soybeans found support in good inspection numbers and optimism regarding negotiations with China this week, +9 (Nov). USDA weekly loadings were above expectations, as they were penciled in at 688,195 MT vs estimates of 550,000 MT. President Trump put out an offer to President Xi regarding easing tariffs on a major company, ZTE, that would save major layoffs. This, as the Chinese delegation is headed across the Pond to Washington D.C. for further trade negotiations this week. Last Friday’s COT Report showed managed funds had liquidated a significant portion of their net long positions, as they were reduced by 50,000 contracts. What will planting progress show this week? Look for NOPA Crush results tomorrow.


Wheat does not have a story and is acting as an anchor to corn. Global weather has improved in the Black Sea, Australian and U.S. Plains growing areas, adding a bearish tone to the market. The weekly export inspection log was a positive for wheat, as analysts were expecting 375,000 MT while actual was pegged at 404,180 MT for the week ending May 10th. Although the Dollar is down today, it has been trading at the high end of the range, making it difficult for U.S. wheat to remain price competitive. The COT Report last Friday afternoon provided an element of surprise, as it showed managed funds have actually moved over to a net long position for the first time in a long time. In light of all the negative fundamentals, the results trended negative: Chicago SRW -7 ½, Kansas City HRW -8 ¼ (July) and Minneapolis HRS -2 (Sept).


Live Cattle took a sharp dive, lock-limit-down on technical selling, -3.000 (June). However, demand has remained solid with the USDA ratcheting down estimates of 2nd quarter supply. Demand is still projected to be 5.3% above last year, but about half of the original estimate of 10.2%.  


Hogs gained back a portion of what was lost in the sharp fall on Friday, +1.050 (June). NAFTA negotiations are front and center, as it is hoped that agreement can be reached this week which would give Congress time to ratify changes before the mid-term elections.

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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