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Closing Comments

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Closing Comments

 

Corn rallied on news that China lifted the sorghum anti-dumping duties, +7 ¼ (Dec). Sorghum and corn demand are linked and getting back on track with regular weekly sorghum sales of 3-6 mbu to the PRC is positive to the complex. Sorghum stocks are not over abundant, even with WASDE predicting a big decline in exports. If the exports end up being added back in, the corn balance sheet will tighten up from the feed side. While today trended positive, the market needs a bigger story related to the U.S. growing season, as trade disputes with NAFTA and China along with a solid start to planting are making it difficult to get up and above resistance in this 4.20 area.

 

Soybeans also found strength in corn and the positive trade gesture from China regarding sorghum, +4 (Nov). New export sales reported today included 56K MT of old crop and 112K MT of new crop to “unknown”. However, there was a large cancellation of a sale of 829K MT from “unknown” (thought to be China). This is not out of the ordinary for May, but sends somewhat of a mixed signal from the PRC, with trade negotiations continuing. As with corn, the market needs a weather problem or an export story, etc, to really get things fired up again. It could be awhile before there are new developments for beans.

 

Wheat rocketed to the highest close since May 4th. Concerns seem to be mounting for Australia, Canada, and the Black Sea Region related to inconsistent moisture over the growing areas. With Russia’s stocks whittling down from strong exports, this is raising some eyebrows. A strong U.S. Dollar is limiting export sales, but Argentina and Russia are seeing their wheat values rise. This was evident from Egypt not buying Russian wheat in their latest tender. Chicago SRW +20 ¾, Kansas City HRW +19 ¾ (July) and Minneapolis HRS +12 ¾ (Sept).

 

Live Cattle traded in a sideways mode today, -.650 (June). Weekly beef exports were at an 8-week low and 2nd lowest of the year, but overall sales are up 17% over a year ago. There appears to be more upside potential, with futures lagging the cash market by a substantial margin.

 

Hogs set back after two days of gains, -1.775 (June). China is an important customer of U.S. pork and it is somewhat surprising that hogs did not follow the lead of the grains’ positive action, with China extending the olive branch on sorghum. However, the supply side is heavy and futures are still disproportionally high in relation to the CME Lean Hog Index.

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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