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Closing Comments

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Closing Comments

The weekly EIA inventory report showed Crude Oil stocks falling 4.2 mln, gasoline increasing 2 mln and a decline of distillates of 1.3 mln. This came in close to analyst expectations. Ethanol data was positive, showing steady production and lower stocks.

Corn managed put in the highest front month traded price and close since July 23rd of last summer as technical buying provided price support coupled with falling ethanol stocks and the ongoing export demand. Broad outside support from in the commodity complex off continued support in crude oil and today’s weaker dollar spilled into the grains as well. Look for the July corn price to look toward the 4.12 to 4.18 area for the nearby target.

Soybeans headed higher led by soy meal on continued concerns over shortages from the world’s largest soy meal supplier – Argentina – due to production losses caused by April rains. While more cooperative weather is allowing a return to harvest progress, the market fears the Argentine exports could fall by as much as 25 percent this year. July’s close was the highest front month close since September of ’14 and matched the recent front month high from 5/18 of 10.88.

Wheat futures were able to close higher off forecasts of rain in the US Plains grain belt providing potential damage in maturing crops. While the US winter wheat conditions have maintained a good/excellent rating of 62 percent for several weeks now, the expectation for large yields is generally built into the market with the fear that the outlook is as-good-as-it-gets preventing coordinated selling here.

Cattle and feeders were generally higher save the May feeder contract that expires today. The market seems to be generally trying to carve out a bottom here following the bearish Cattle on Feed report. Futures should be able to hold if cash cattle don’t provide additional signs of weakness as we near Friday.

Hogs followed through on yesterday’s reversal. Much of the recent weakness has been off liquidation of long positions. The weakness however may be overstated and underestimating the Chinese demand that could be coming to the table.

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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