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Closing Comments

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Closing Comments

FSA released final acreage today showing total prevent plant acreage at 6.670 mln acres vs 4.371 mln last year and the largest since 2013’s 8.318 mln.

Crude pressure continues on the anticipation of lifting of Iran’s sanctions allowing for more global supply of Iranian oil supplies.

Global equity markets continue weakness on growth and deflationary concerns.

Monday the markets will be closed for the Martin Luther King holiday observation.

Corn

Corn finishes the week on its highs after the USDA report disappoints the bears. Fund position reported with new record net short.

Commitment of Traders report this afternoon showed that as of Tuesday this week – which includes price action from the day of the USDA report – Managed Money Futures + Options combined now have a record short net position of -186,831. Adding nearly -25k short positions over the previous week.

Buenos Aires Grain Exchange estimated 15/16 Argentine corn planted to 3.1 mln HA, up from 2.85 mln previously.

The balance of the week following the USDA report was generally supported by short covering but not convincingly so until today’s finish going into the holiday weekend. Funds were reported buyers of 8,000 contracts.

March corn gained 6 ¼ for the week and brought price back above a long-term trendline. Upside resistance for March this coming week will be found in the 3.65-3.70 area.

Soybeans

Soybeans recover early losses on the day. Fund trim short position.

NOPA report showed soymeal exports for December at 830,874 tons vs previous month at 848,441 tons. Crush for December came in near trade expectations at 157.71 mln bu vs prior month at 156.13 mln. Soy oil stocks at 1.481 bln lbs were just below trade expectations.

Commitment of traders showed Managed Money lightened their short position in beans by 26,507 contracts, leaving their net short position at -53,040 for combined futures and options as of the end of last Tuesday.

Safras lowered their Brazil soybean estimate to 99.8 mln mt vs 100.4 mln last month. The reported Mato Grosso soy harvest at 2 percent complete vs 4 percent last year.

March soybeans gained 13 ¾ for the week following the reduction in soybean ending stocks to below trade expectations. Board crush margin continues to suffer as soybeans gain on meal. Upside resistance for March soybeans will be 8.95-9.00 area.

Wheat

Wheat recovers, reducing losses of previous two days ahead of long weekend. Loses 4 ¾ for the week.

Wheat was able to find support on short covering ahead of the long weekend in the face of continued weakness in European wheat futures and weak energy markets.

Commitment of Traders report showed Managed Money had lighted their short position in Chicago by 25k contracts, leaving their combined futures and options position at a net short of -71,128.

Wheat continues its sideways to lower trend, but today’s action showed at least some reluctance of fresh selling ahead of the long weekend. For now, 5.00 March Chicago should prove to be selling resistance.

Kansas City closed as a slight premium to Chicago in the March contract – the first time since October.

Livestock

Livestock lower on doubt over cash strength and soft equity markets.

The CDC stated that the bird flu strain recently found in Indiana has no evidence linking it to human infections but they are working on a plan to monitor locals exposed to the strain. The Ukraine gov’t has moved to halt imports of poultry from the state of Indiana.

Next Friday, the 22nd, the USDA will release their monthly cattle on feed report and monthly cold storage data.

Futures were weak today looking ahead to next week’s shortened trade and mixed wholesale beef values and this week’s cash prices that didn’t meet expectations. This week cash cattle in the Plains moved at $132 to $134 per cwt compared to $131 to $133 last week.

Cash hogs traded steady around the Midwest, bolstered by rising pork prices and moderate packer demand for next week. Packer margins have improved and overall hog supplies remain ample, limiting continued gains for now.

Closing Market Snapshot

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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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