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Water Street Solutions

Water Street Solutions Daily Report 2017-3-23
2017-03-23T03:36

Corn is probing for a short-term seasonal low ahead of the March 31st report (April 1st was last year’s spring low). Spot basis bids for corn were mostly steady to higher in the U.S. Midwest today as futures edged lower and farmer sales remained light. Weekly export sales came in above trade estimates as US corn continues to compete for export business. The corn acreage number seems to be creeping higher than the 90.0 million acres that the USDA World Outlook Board estimated. May corn closed -2 cents at 3.56 ¾, the lowest trade for 2017. Corn looks to be 3 to 6 cents from significant support as demand continues to be strong and selling ahead of spring will slow. 

Strong weekly exports in Soybeans couldn’t keep May from losing 8 ¾ to move to its lowest close since October 14th. Fund are long and the continued pressure from South America’s large harvest has at the low end of a recent 8-session consolidation. In an attempt to entice selling, some processors and elevators raised their basis bids. For example, a processor in Council Bluffs, Iowa, bids gained by as much as 5 cents per bushel.

Chicago Wheat continues to slide lower on cooperative weather. Chicago lost 1 ¼ today to close at 4.21 in May, not far from the December low of 4.06. Cooperative weather had the KC market under the most pressure, losing 4 ½ in May. The winter wheat belt is expected to get two separate storms. Minneapolis/KC spread has exploded the last 12 sessions with Minneapolis gaining more than 45 cents in the May contract. Rising open interest during the March break is suggesting that the funds are building an enormous net short position in Chicago.

Live cattle fell for the first time in three days, as higher beef prices supported sharply higher trade in the cash market. Beef inventory in cold storage at the end of February was estimated at 502.4 million pounds, 0.8% less than a year ago but still about 6% higher than the five year average. The June contract gave up 0.975 of yesterday’s gain to close at $112.800.

Hogs collapsed early below the 200 day moving average in the June contract before a full reversal at noon to close $1.850 higher at $77.600. Total pork in yesterday’s cold storage at the end of the month was 572.0 million pounds, 9% less than a year ago and now 11.3% lower than the five-year average.


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

Water Street Solutions Daily Report 2017.3.22
2017-03-22T03:30

Cornunder pressure from beneficial crop forecasts for production in Brazil, continued to fall today touching a seven-week low. May corn lost -2 ½ closing at 3.58 ¾. Spot basis bids were steady to narrowly mixed at U.S. Midwest elevators and ethanol plants. The U.S. Energy Information Administration said U.S. ethanol output eased 1,000 barrels per day and stocks of the corn-based biofuel declined to the lowest levels in more than a month.

Soybeans were a little weaker today and continue to trade in the same choppy range as the past two weeks. Rising forecasts for production in South America, combined with fears of a big increase in U.S. acreage this spring, continue to hang over the market. U.S. farmers are thought to plant a record 87.3 million acres of soybeans this spring, up from 83.4 million acres a year ago. Apart from Argentina, where soybean growing has become less attractive for political reasons, all key export countries are reaping their highest-ever crops in the current 2016/17 season. The USDA reported a sale of 120,000 metric tons of soybeans for delivery to China.

Wheat kept its bearish tone today and touched its lowest level since the first week of January. Global wheat stocks are huge and even though U.S. plantings are down this year, yields are expected to be good. CBOT May soft red winter wheat was off -4 ¼ cent at $4.22 ¼ a bushel. USDA reported a sale of 120,000 metric tons of hard red winter wheat to Saudi Arabia early today.

Live cattle, fueled by strong wholesale beef values, moved up sharply today. June gained $2.725 to close at $113.775. Solid wholesale beef movement, continued packer profitability and sparse cattle supplies in parts of the U.S. Plains bode well for cash prices. Global headlines continue to revolve around the unsanitary packer conditions reported in Brazil. The USDA cold storage report issued after the market closed showed total frozen beef at 502.4M pounds – slightly below year ago levels.

Hogs technical buying and Tuesday's firmer cash prices pulled up CME lean hogs, said traders. June lost -0.575 to close at 75.750. Farmers are not holding back hogs based on lighter animal weights and explosive cattle market gains further support hog futures. In the cold storage report, total pork gained from last month but is at 91% of year ago levels. Bellies are at only 26% of year ago levels but did rebound from last month’s levels coming in at 115%.


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

Water Street Solutions Daily Report 2017.3.21
2017-03-21T03:11

Corn futures fell again today, hitting a one-week low with May corn and finished down -2 ¼ cents at $3.60 ¼ per  bushel. Lack of friendly news, larger than expected corn harvested acres in South America, threats by Mexico to shift corn sourcing to South America and weak energy markets continue to press on corn for now. Demand however is still solid in the ethanol and export market. Corn posted a new low on this move, but selling exhaustion lifted futures off the bottom of the daily range and prevented a new low close on the move.

Soybeans continue their consolidation trade, finishing May up 2 cents at $10.01 ½. Some help was found by the weaker US dollar but rally attempts were kept in check by expectations of huge harvests in South America. Crop analysts continue to raise estimates of Brazil's ongoing soybean harvest to new records. A record harvest is also expected in Paraguay, the world's fourth biggest soybean exporter. Only two of the last twelve sessions in the May contract have closed "green."

Wheat futures declined for the second consecutive day reaching their lowest level in over six weeks. The weather forecast continues to keep production fears in check for now. Quality led price lower with May contracts down -10 in Minneapolis, -7 in KC and -3 ¾ in Chicago.

Live cattle futures beat back initial selling on Tuesday, helped by futures' discounts to last week's cash prices. Profit taking and uncertainty about this week's cash returns limited market advances. Given extremely profitable packer margins and tight supplies in parts of the U.S. Plains, market participants are unsure about this week's cash prices. Brazilian meat scandal update: The USDA is inspecting all meat imports from Brazil. Switzerland has banned Brazilian meat imports all together.

Hogs continued their downtrend for the fifth consecutive day closing June down -1.050 at $76.325. For today, sell stops and technical selling pulled down CME lean hogs. With such large supply, bulls need a steady flow of strong export news for relief. The market will be watching tomorrow’s Cold Storage report scheduled to be released at 2:00 pm CT.


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

Water Street Solutions Daily Report 2017.3.16
2017-03-16T02:26

Corn traded higher today closing +2 ½ at $3.66 in May. Weekly corn sales were impressive at 1.255 MMT, coming in solidly above the expectation of 700k-1.0MMT. Reflecting a notable increase in sales relative to the last four weeks and set a 7-week high. A friendly close tomorrow would turn the weekly charts back for higher.

Soybeans firmed up today closing +3 ½ at $10.01 ½ in May. Spot bids were steady to higher; however, in the wake a recent multi-month lows in futures pricing, farmer sales remained minimal. The USDA confirmed a sale of 120,000 metric tons of soybeans to unknown destinations, and according to Thomas Reuters, “Brazil soybean exports are slowing down significantly, likely due to lack of farmer sales.” Stronger Brazilian currency and weaker US dollar has pushed the value of soybeans priced in Brazilian reals to their lowest level in months. Soybeans continue to consolidate on trend-line support, struggling to find fresh sellers ahead of the March 30 planting intentions report.

Wheat finished unchanged in Chicago after being mostly higher during the session. May KC added 2 ¾ while Minneapolis May picked up 7 ½. Due to both an unchanged basis price and yield prospects/development up in the air, famer selling of hard red winter wheat was quiet throughout the day. Through its daily reporting system, the USDA said private exporters sold 120,000 tonnes of U.S. hard red winter wheat to Algeria for 2016/17 delivery. In the world of weather, the latest weekly U.S. drought Monitor showed little change in drought conditions in Oklahoma, western Kansas and eastern Ohio. Tuesday’s low in wheat will be a critical low to hold moving forward. If we can close the week with another positive note, the weekly charts will look to have their upward momentum return.

Live cattle futures impressed today closing up +1.175 at $109.425 in June. The positive move was fueled by higher cash prices. Triple digit packer profits, brisk wholesale beef demand and scarce supplies in parts of the plains are thought to be the drivers behind the increase in cash price. With a ‘cloud” of increased supplies ahead hanging over the market, some experts question whether the gains are sustainable through the weekend.

Hogs were lower, trading “inside” yesterday’s range finishing -0.150 at $78.675 in June. Profit taking and uneasiness about looming supply buildup caused the pressure. On the bright side, Wednesday’s firmer cash prices minimized future contract loses. Iowa/Minnesota saw cash prices increase as much as $0.98 from Tuesday to Wednesday.


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

Water Street Solutions Daily Report 2017.3.15
2017-03-15T03:11

Corn follow-through buying overnight continued positive through the session today as there have been several good export orders from Mexico, China and other parts of Asia this week, +1 ¼ at $3.63 ½ (May). EIA Ethanol weekly report highlighted an unexpectedly big bounce in production over last week (307 million gal. vs 300), with a small decline in ethanol stocks and gasoline demand lagging behind a year ago. Last year, ethanol production began to dip starting next week all the way through May, so it will be worth watching to see if demand continues at the current 4.5% over last year. If it does, the USDA’s corn demand estimate may be too conservative. Of note, weekly gasoline demand is down 5.1% year-to-date from last year.

Soybeans were not able to find a silver lining today, as the NOPA report was less than impressive and there is always the looming threat of Chinese order cancellations this time of year. May futures saw another decline, -1 ¼ at $9.98. The NOPA crush report showed that February soybean crush production was lower than expected (142.79 million bushels vs 146.1) and soybean oil stocks were higher than expected 1.770 billion lbs vs 1.75), for members of the organization. Soymeal exports were pegged at 738,825 MT vs prior month of 891,143 MT. The slowdown in crush activity can be attributed to the influence of declining crush margins and tepid soybean meal demand. To sum it up, in order for crush to hit the USDA projection for the marketing year, crush will need to eclipse its second half of the year record by 3%. On a positive note related to trade, President Li from China was quoted as saying that he hopes that the trade relationship with the US will move forward in a positive direction. He plans to meet with President Trump in FL early next month.

Wheat was the star of the grains today, buoyed by news that Egypt was back in the buying mood after a two week hiatus, as they announced they are in for 420K MT of wheat. The US has several competitors vying for this opportunity, with main competition coming from Russia, Ukraine and France. Weather news continues to also be closely watched with freezing temps all the way down to Alabama, which could nip production up to 10% in the southeast. There are forecasted rains for the Southern Plains in the next several days, which will help boost crop conditions. May Chicago +5 ½, Kansas City +4 ¾, and Minneapolis +8.

Live cattle regained most of the losses from yesterday with a big move to the upside, +1.375 (April). Of concern to traders is the surging beef supplies and lessening demand as we get into Spring. Bird flu may not become a major issue without the threat to humans, but could result in larger meat supplies stateside, which will be a bearish weight on the market. Production in the second quarter could be up to 520 million pounds higher than the 1st quarter compared to only 252 million pounds higher for the same period last year due to the jump in placements and the shift to heifers on feed. Snowstorms in the east and cold weather elsewhere could also slow demand. Look for $115.87 as support for April.

Hogs lost some momentum today after solid gains the last two sessions with April down -.750 and June -.350. Hogs are seeing their highest cut-out values since February 21st. Hogs could experience greater import demand from China due to bird flu and poultry issues, as consumers in the PRC are shifting away from poultry to pork. Technical action has been impressive of late, spurring more short covering yesterday. Key June support is at $78.15.


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

Water Street Solutions Daily Report 2017.3.14
2017-03-14T02:09

Corn found support in a USDA reported private sale of 120K MT of corn sold to Mexico and rumors of an even larger sale to China (up to 500-600 tons due to quality issues), +1 ¼ (May) at 3.62 ¼. There has been a lot of chatter around the idea that Mexico is shopping South America as an alternative to US corn. It will be difficult for them to justify financially and logistically, but it is still a brooding market concern. Brazil is expected to yield up to 4 MMT more than previously thought, according to the USDA supply and demand report last week. Informa recently forecasted US corn acreage to be 90.8 million acres, with production of 14.22 billion bushels and an average yield of 170.4 bpa. Other potential US corn sales include 65K MT to South Korea and the possibility of a Taiwan purchase of 40-65K MT. Expect more sideways trade leading in to the March 31st planning intentions report. May support at $3.59 ¾ held today after six consecutive sessions of losses.

May Soybeans made a big break down to $9.92 early in the session but bounced back modestly, -6 ¾ at 9.99 ¼. There is a sizeable open interest of 20K contracts in May 10.00 puts and another 14K open interest in May $9.80 puts that are influencing trade. Beans seem to be looking to find a level to lure demand their way. Bird flu in China is putting a damper on meal demand, as the poultry industry is trying to regroup from the rash of outbreaks in Asia. In South America, Brazil crop just continues to garner more glowing reports, as Dr. Michael Cordonnier, well-known crop scout, was the latest to get behind the notion that the crop will outperform expectations, raising his estimate from 106 MMT to 107 MMT. He also raised Argentina’s forecast by 1 MMT. Could this open the door to future Chinese cancellations of US orders? Informa pegged soybean planted acres at 88.7 million, compared to the USDA 88 million. At a 48.5 bu/acre yield, this would give an ending stocks tally of 651 million bushels compared to 435 million this year and 197 million last year. The NOPA crush report will come out tomorrow. Watch May bean resistance at $10.16 ½ and $10.24..

May Wheat avoided closing lower for the sixth day in a row, with Chicago flat. Kansas City was – ¼ and Minneapolis +1 to round out the complex. Wheat has been very weather driven, and needs a drier forecast in order to correct its oversold condition, as the Southern Plains look to be receiving a round of rains in the next few days. Wheat, like the other grains, has been in a bearish mindset with a glut of world supply and no real big stories to sway the market. Wheat planted acres are down to record low levels in the US along with possible winterkill, and this will help the cause, but the Dollar’s strength will continue to work against exports. Will US wheat be able to compete with the Black Sea for more cargoes in the coming months?

Live Cattle experienced a substantial pullback today pressured by profit-taking and uncertainty about this week’s cash prices, -1.425 (April). Traders are apprehensive that spring demand may be lower than expected with supplies predicted to increase. Production in the 2nd quarter could be up to 520 million pounds higher than the 1st quarter compared to only 252 million pounds higher for the same period last year. Futures are continuing to show a major discount to the cash market and packer margins are still very profitable.

Hogs have continued to surprise and confound the experts, supported by firm cash and wholesale prices, with April +.600 and June +.450. The USDA data on Monday afternoon showed wholesale pork prices up $.48 and picnic shoulder cuts up $1.91. Average packer margins are also thought to have increased by $.40. Other positive influences include abnormal basis levels and the idea that China and other countries may be increasing their demand for imported pork.



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

Water Street Solutions Daily Report 2017.3.13
2017-03-13T02:42

Corn was in a blasé mood today, partly based on rumors that Mexico is buying Argentine corn for summer shipment and reports of Brazil and Argentina’s exports totaling 56.5 MMT, which is 20.6 MMT higher than last year (not to mention record predicted South American yields). May futures poked down into new territory at 3.61, finishing the session -3 ¼. On a positive note, USDA corn shipments were announced this morning for the week ending March 9th, with corn over expectations at 1.547 MMT vs. 1.450 MMT. Informa released their 2017 corn planted acreage estimate at 90.8 million acres, which is higher than other estimates of 90 million acres. The big looming question is - Will the March 31st planting intentions report confirm what has long been suspected?

Soybeans closed out last week down 31 cents, not getting any help from the bearish USDA report. Futures traded both sides of unchanged today, - ½ (May) at 10.06. Speculative length was larger than expected coming into this week. Informa released their acreage estimate of 2017 soybean planted acres at 88.7 million acres. On the export front, the week got off to a good start with a USDA reported private sale of 120K MT to “unknown” destinations for 2017/18. This was followed by the announcement that USDA soybean shipments were right in line with expectations, coming in at 656,288 MT compared to expectations of 650K MT (but significantly lower than last week). It is rumored that China may be shifting as many as 8 million corn acres to soybeans. Although their demand continues to climb, this could cut into export business with key trading partners such as the US. Looking at South America, AgRural is projecting the Brazilian soybean crop to be 56% harvested, which is well ahead of the average of 47% for this time of year. Mato Grosso is 88% harvested. The 10.00 zone a critical area for May beans.

Wheat has closed down five consecutive days, its most recent casualty being the 100-day moving average, -10 (Chicago May). Kansas City and Minneapolis followed suit, down -12 ½ and -7 ½ respectively. Informa pegged all 2017 planted wheat acres in the US at 45.6 million acres, which is in the neighborhood with other predictions. Wheat rounded out the USDA inspections for the week (ending March 9th) right in line also, showing 519,127 MT vs. the expected 500K MT. In the Black Sea region, Ukraine is reporting their winter wheat crop at 83% good/satisfactory condition vs. 70% at this time last year. And, Russia is touting 1.94 MMT of wheat exports in January vs. 1.32 last year, according to their latest official release. The southern plains are predicated to get rain over the next 6-10+ days, which helped to trigger negative sentiment. Look for wheat to continue to seek direction from corn and beans.

Live Cattle had a solid start but an uninspired finish, with April trading up to 117.750, +.150. Increasing beef prices and tighter supplies are lending support to packer margins along with futures’ discounts to recent cash prices. USDA boxed beef cut-out values were up well over $4 on Friday, the highest since last June. Today is the final day that CME livestock funds that track the Standard & Poor’s Goldman Sachs Commodity Index will roll their long April positions (mostly into June). Feeder cattle were also propelled higher on follow through buying and live cattle futures gains.

Hogs arrived this week oversold and looking for a Monday rebound – and get it they did, as April jumped up to 70.225, +2.050, followed by June +1.825. The pork cut-out is providing short-term spark to the market, along with short-covering and technical buying. The market has been showing volatility and it is likely to continue. China imported 25.9 million lbs. of pork in January, which was their lowest monthly total in a year; however, there is talk of the potential of increased buying from the PRC. Supplies continue to be high and production is expected to be up 6% in the 2nd quarter.

The Commitment of Traders report released Friday afternoon showed funds are net long 80K corn, 128K soybeans, 61.5K soybean meal, 26.4K soybean oil, 35.1K KC wheat and 8K MPLS wheat. Coming in short 63.2K contracts was CBOT wheat. In Other news, according to media reports, President Trump is planning to host Chinese President Xi Jinping in early April at his Mar-a-Lago resort in Florida, as he seeks to smooth relations with the People's Republic of China. This will be followed closely by the business community, and ag in particular.


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

Water Street Solutions Daily Report 2017.3.10
2017-03-10T02:59

Corn markets were not able to shake off yesterday’s less than positive report, as corn continued its downward path to 3.64 ¼, -2 ¾. Overall, US carryout was at 2.32 billion bushels, which was unchanged. However, the bigger story was the USDA raising Brazil estimates to a yield of 91.5 MMT vs. the expected 87.7 MMT. There have been a lot of rumors and predictions circulating, but this gave more validity to the idea. Another change came in the form of the USDA moving 50 million bushels of feed usage to ethanol. From here until the end of the month, the focus will center on the March 31st planting intentions report. Will corn surprise as last year, and end up planting more acres in spite of all the chatter otherwise?

Soybeans have succumbed to pressure from negative fundamentals as well as not the prettiest technical picture, -4 ½ at 10.06 ½ (May). Last week’s gains were mostly fund driven rather than by fundamentals. When fundamentals turned negative yesterday, the markets followed. The supply and demand report confirmed what analysts have been predicting, as the USDA also increased their estimates of Brazil’s yield to 108 MMT compared to expectations of 106 MMT. This may open the door to a further shift to South America of Chinese buying, which could result in cancellations of Chinese orders from the US. In addition to more crops in the southern hemisphere, US carryout increased, and there is also the background chatter of whether soybean acres will increase by 4 or 6 million acres? Will May hold support in the 10.00 area?

Wheat fundamentals seemed to be the least negatively impacted yesterday by the USDA report, as ending stocks were pegged at 1.129 billion bushels (off 10), with spring wheat reduced by the largest amount. But on the flip side, world carryout is estimated to hit another record high at 249.94 MMT compared to 248.62 MMT. This did not compute into market gains today either, as wheat is a follower of corn and beans and they were up to no good again today. However, wheat (Chicago) was able to hold above the 100-bar moving average. Kansas City showed the largest losses at -7, followed by Chicago SRW – 3 ½ and Minneapolis’ spring variety at -¼.

Live Cattle found support in solid wholesale beef demand and futures’ discounts to this week’s cash prices. April cattle finished at 117.600, +1.100. Wholesale beef prices were up $1.95 per cwt and select cuts followed suit by $1.71. Cash cattle in the Plains sold for $124-126 per cwt compared to $123-126 last week. Packer margins also continue to show good profits. Will Lent temper buying enthusiasm over the next weeks.

Hogs felt some weakness from follow-through selling in conjunction with yesterday’s lower cash prices. April was still able to eke out a positive gain, ending at 68.175 and +.100, while June showed a small loss at 76.900, -.025. Exports have maintained reasonably good levels which has helped packer margins. Hogs are expected to see a boost in 2nd quarter production, up 6% from last year.

In other newsbird flu is once again in the headlines as a second case was discovered in Tennessee. This time the unsuspecting victim was a commercial chicken flock, infected with a low-pathogenic strain, as compared to the high-pathogenic case at a Tyson producer last week.


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

Water Street Solutions Daily Report 2017.3.9
2017-03-09T02:13

May Corn took out both the 100 and 200-bar moving averages on the way down today, -5 ¼ at 3.67. The USDA Supply & Demand Report did not do anything to help bearish mindsets as carryout was announced at 2.32 billion bushels compared to the previous estimate of 2.31. World corn carryout was also up, showing 220.7 MMT vs. expectations of 218.5. The standout stat was Brazil’s corn production pegged significantly higher at 91.50 MMT, against the predicted 87.7 MMT. Not to be left out, Argentina also came in above expectations for 2016/17 output at 37.5 MMT compared to estimates of 36.5 MMT. Feed usage was trimmed back by 50 million bushels while ethanol usage was upped 50 million bushels. The feed usage does not seem to jive with greater cattle supplies, nonetheless must be considered. Until we get into a bigger “problem”, rallies are not likely to sustain in the short-term.

Soybeans took the USDA news today the hardest of the grains, -10 ¾ at 10.11 (May). Beans have already been teetering on the precipice of bearish fundamentals, and they did not get a lifeline from the USDA report. Soybean carryout in the US was pegged at .435 billion bushels compared to estimates of .416 billion bushels. On the world stage it was more of the same with carryout estimated at 82.8 MMT compared to previous predictions of 81.4 MMT. Regarding South America, ideas of record yields were confirmed by the USDA as they estimated Brazilian production at 108 MMT vs. the expected 106 MMT. Argentina followed suit at 55.5 MMT, as compared to projections of 55.1 MMT. March 31st will now be the next big event, as planting intentions by growers will be revealed. With two-thirds of American farmers convinced soybeans are the more profitable choice in 2017 (according to Purdue University’s Ag Barometer survey), the acreage announcement will help plot a course for the coming year. What will be the consequence of breaking and closing below key support at 10.17 today?

Wheat futures were mixed and the least negatively impacted of the grains, with Chicago -3 , Kansas City -3 ½, and Minneapolis +4 ½ (May). Wheat was slightly under the USDA predicted carryout at 1.129 billion bushels compared to expectations of 1.13 billion bushels. However when taking the entire world supply into account, wheat came in over expectations at 249.9 MMT compared to predictions of 248.7 MMT. And, wheat production is up marginally with larger players, i.e., Russian and Ukraine, right in line with expected, with chatter that the Russian crop may even be understated by 800K MT. For one, the winterkill concerns there have seemed to abated to some extent. In the macro picture there is just too much wheat. Minneapolis wheat experienced gains today based on a reduction in the spring wheat numbers.

Live Cattle experienced strong gains early and held on for a solid finish, +.525 (April) . Cattle were prodded along by good wholesale beef demand and futures’ discounts to cash prices, coupled with technical buying. Boxed cut-outs were up and weekly export sales were well above the four week average (mostly to Japan). The USDA S & D report had of a jump of 250 million lbs of beef for last month and exports up 10 million lbs, which in actuality were minor revisions.

Hogs traded moderately lower, with pork cut-out values pressuring, -.350 (April). Weekly exports came in over the prior average, at 18,100 tonnes from 16,900 tonnes (mostly to Japan). Pork production was down 65 million lbs. with imports also down 40 million pounds. Exports for 2017 were revised up 4.2%.


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

Water Street Solutions Daily Report 2017.3.8
2017-03-08T03:05

Corn found itself mired in sideways trade, looking ahead for spring weather to become more of a factor, -3 ¾ at 3.72 ¼ (May). Short-term fundamentals tend toward bearish as Brazil’s crop is expected to be huge and the US farmer still has a good amount of old crop stored away. The EIA weekly ethanol report was released today and it showed ethanol production down 4 million gal/week but still up 4.5% over last year. It is the 35th consecutive week that production has been at a record level compared to the same week in the previous year. Ethanol stocks were also down, after nine straight weeks of increases, by 10 million gallons. They are also slightly below last year’s same week levels. On a related note, gasoline demand had a notable increase but is still behind same time last year. One would think ethanol production would continue to see a pull-back based on the fundamentals, but typically March to June is good from a seasonal perspective. Chinese tariffs on US ethanol and DDGs have brought exports to the PRC down to a trickle. These tariffs vary by company and the US Grain Council is working on both problems. Other areas of the world are picking up the pace, but it will be awhile before the Chinese buying is replaced.

Soybeans have continued to sell off with profit-taking in front of the USDA crop report tomorrow, with ever growing broadcasts of Brazil’s yield, -3 ½ at 10.21 ¾ (May). Lanworth was the latest to raise estimates, as they are now predicting a Brazilian soy crop of 107 MMT, up from 106 (USDA 104MMT). Some of the traditional grain traders have taken themselves out of the game temporarily until they receive more definitive news on March 31st regarding US planted acres and yield estimates. China imported the largest amount of soy since 2010, up 23% over the yearly average. Strong crush demand from increased capacity is believed to be partly behind the increase. Keep an eye on 10.17 May as an important level of support.

Chicago Wheat has looked strong on the charts, but experienced a sizeable pull-back today, -9 ½ (May). Kansas City and Minneapolis also rounded out mid-week with red numbers, -6 ½ and –3 ½ respectively. Weather has trended negative, but premium has already been priced into the market. Short-term, the eastern half of the US has a better probability of needed rains and later winter snow is in order for the upper Great Plains, which did not help trade. Turkey put in for 130K MT of EU wheat, while Japan said they will skip their weekly tender. There is not much in the way of export activity for the rest of the week. All eyes are focused on the USDA S & D report tomorrow, although it is considered a minor report.

Live Cattle has looked strong on the charts, but experienced a sizeable pull-back today, -9 ½ (May). Kansas City and Minneapolis also rounded out mid-week with red numbers, -6 ½ and –3 ½ respectively. Weather has trended negative, but premium has already been priced into the market. Short-term, the eastern half of the US has a better probability of needed rains and later winter snow is in order for the upper Great Plains, which did not help trade. Turkey put in for 130K MT of EU wheat, while Japan said they will skip their weekly tender. There is not much in the way of export activity for the rest of the week. All eyes are focused on the USDA S & D report tomorrow, although it is considered a minor report.

April Hogs were able to forge out a small gain, +.375. Hogs are facing plenty of supplies ahead and are coming off a January that had less than impressive exports. The front month (April) benefited today from higher cash prices while the deferred were weakened by profit-taking and expected increase of supplies. Packer margins have remained profitable and retail pork demand has followed suit.

In other news, farmers’ positive sentiments have retreated somewhat from January, according to Purdue University’s Ag Barometer, which surveys 400 producers, with “caution” being the predominant thought. Two-thirds of farmers cited soybeans as the more profitable choice over corn in 2017, making the March 31st planning intentions report even more important. Outside markets influencing Ag are equities (over-heated), interest rates (hikes planned in 2nd and 3rd quarters), and the energy sector (energy has likely put in a bottom and should increase, which would positively affect corn and beans).

The USDA Supply & Demand report comes out tomorrow at 11am.


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

Water Street Solutions Daily Report 2017.3.7
2017-03-07T03:48

Corn looks more positive than beans technically, but still was not able to overcome bearish mindsets with a lack of news, -2 ½ at 3.76 (May). Of some growing concern, a second case of bird flu was discovered at a Wisconsin turkey farm that was a different strain than the H7 virus found recently at a TN facility. It was announced yesterday that South Korea bought a total of 60K MT of US corn for May delivery. And, this morning the USDA reported another private sale of 120K MT of corn to “unknown” destination for 2016/17. FC Stone is estimating Brazil’s first crop corn production to eclipse the original estimate by 2.2 MMT while the second season crop may be down slightly. Stateside, Texas is ahead of schedule with their corn planting, as they are showing 15% complete compared to the long-term average of 9%. This Thursday will feature the USDA crop report, and analysts are predicting corn ending stockpiles at 2.31 billion bushels, down slightly from last month’s 2.32.

Soybeans fell sharply below the 100-day moving average on profit-taking ahead of the crop report, -12 at 10.25 ¼ (May). AgRural was the latest to up their Brazilian soybean production estimate, from 105.4 MMT to 107 MMT. And, FC Stone also increased their number to 109.1 MMT from last month’s 104.1 estimate. It appears that Brazil’s most recent logistics issue is cleared up, as the Brazilian army reported they have been able to re-open the critical passage to the north out of Mato Grosso that is utilized to transport soybeans to northern ports. The US was not able to capitalize on this short-term disruption. A factor that could apply selling pressure to soybeans, is the fact that Brazilian farmers are 15-18% undersold compared to the 5-year average. Once that selling happens, you will see more of an impact on the board. The Thursday USDA crop report is expected to show soybean ending stockpiles down slightly from the last report at 418 million bushels compared to 420 million bushels. It will likely take a violation of 10.00 to shift the bias to negative, in spite of the contrary fundamentals.

Wheat was not able to resist the negative pull of beans with little fresh news leading into the Thursday report, with Chicago –2 (May), Kansas City –1 ½ and Minneapolis -2 ¼. On the world stage, Egypt rejected 3 cargos of wheat from Russia and Argentina due to quality issues. Regarding winterkill concerns, Russia says their crop is in great condition with only 3-5% showing poor conditions. An official expressed that he does not see winterkill being a big issue for them. If they stay on track with their current pace, they should produce another record level wheat crop. Jordan was in for 50K MT of optional origin wheat, according to cash traders. Japan decided to skip their weekly tender this week. Weather has trended somewhat negative here in the US with hard red winter dryness and early planting delays.

Live cattle found support in short-covering and futures’ discounts to cash price expectations for this week, but still finished down slightly -.200 (April). This is the first of 5 days that will see rolling of April long positions to June by market funds that track the Standard & Poor’s Goldman Sachs Commodity Index. Wednesday’s Fed Cattle Exchange will feature 3,400 animals, and will help to give cash price direction for the remainder of the week. Supplies in the north remain fairly tight, while they have loosened up in the southern plains. Ironically the bird flu story could be friendly to beef and pork if it gains further traction.

Hogs got a boost from higher cash prices and higher wholesale pork values, with bellies leading the way on a $7.25 bump, +.875 (April). Positive packer margins and good pork demand have enabled the flow of hogs to continue moving. Look for the April contract to likely decline in value, while June may see its customary seasonal spike.


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

Water Street Solutions Daily Report 2017.3.6
2017-03-06T02:06

Corn was not able to generate positive momentum today, causing one to wonder if the recent USDA confirmation of a case of the H7 bird flu strain at a poultry farm in TN that contracts with Tyson Foods may have weighed on the markets (South Korea moved immediately to ban US poultry imports)? May futures finished at 3.78 ½, -2 ¼. On the positive side, USDA weekly corn inspections this morning were a solid 1.444 MMT for the week ending March 2nd, compared to expectations of 1.200 MMT. South American corn seems to still be in great shape, in spite of a wet weekend in Argentina and Brazil having some logistics issues. This Wednesday will give us another look at the USDA’s view, but will probably not offer much to change the status quo. For May corn, look for upside targets at 3.90 and 4.08, with support around 3.67 ¼ (from last week’s low)..

Soybeans continued in their broad-range trade, finishing weakly at 10.37 ¼, - ¼ (May). A story that garnered a lot of press last week and will continue to be worth watching is the Trump Administration reviewing the possibility of a key change to US biofuels policy that could have market and political ramifications. The USDA released their weekly inspection numbers this morning and they pegged soybeans above the estimated 875K MT at 921,779 MT. Futures have been trading in a whipsaw fashion with “decision time” approaching on the chart. Will we break down below the 10.00 level or come out to the topside, where 11.00 would then potentially be in play? The 10.17 low from February 27th is a short-term risk parameter, and keep an eye on 10.88 resistance as a key directional level.

May Wheat was the grain leader today with Chicago +5. Kansas City and Minneapolis were +2 ¼ and -5 ¾ respectively. Wheat has been down of late, but had a nice recovery last week. This morning there was a show of continued strength as May futures gapped higher at open and broke through the 4.40-4.50 area of resistance. USDA weekly inspection numbers this morning were not as friendly to wheat, as they showed 535,920 MT for the week ending March 2nd vs. ideas of 650K MT. Weather is a closely watched factor for wheat this time of year, as winterkill continues to be a concern with variable temperatures causing early emergence from dormancy and then dipping back below freezing. The central and western plains do not have any rain in the 7-day forecast. If wheat is able to get more of a story to trade, it may be able to break out to the 5.00-5.15 level. The overall trend remains up.

Live cattle futures were in a mode of technical correction for the 4th consecutive session, -.425 (April). Cash cattle is trading at a $10 premium to futures and the wide basis may provide some support. Look for a seasonal bump as we move into March, as trade will probably will be in a broad range trade between 111.00-120.00. It will be important for the market to stay above the risk level of 114.60, as a break below could be significant, with managed money holding a very large long position.

April Hogs have abated and likely will continue to weaken after the poor finish last week (they were down 127 points). Today, futures were able to eke out a modest gain, +.425. Like cattle, the market is vulnerable to steep losses with managed money holding a large long position. Prices have adjusted to lower levels, as some of the variables that powered the rally are running out of gas, i.e. big demand in domestic and exports markets, pork supplies that were under projections, and a short term squeeze in the spot belly market. Because belly prices are sharply lower, packer margins have followed. What will the outlook be for belly prices this spring and summer? Keep an eye on the trade situation, as it will be key for US pork to continue to flow uninterrupted to its demand destinations.


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

Water Street Solutions Daily Report 2017.3.3
2017-03-03T03:29

Corn could not generate any excitement going into the weekend, as May futures traded both sides of unchanged before settling slightly positive, +1 ¼ , at 3.80 ¾. Brazilian corn exports are largely behind last year with only 487K MT exported in February, compared to the super-sized February last year of 5.4 MMT. To put in a longer-term perspective, it was the 2nd lowest February in nine years. However, the 2nd crop safrinha corn could change that story in a hurry if the June-July crop is as large as currently predicted. Informa came out with their most recent numbers, and they showed an increase in estimated Brazilian corn crop of 2 MMT, from 89.0 to 91.0. This is significantly higher than other predictions, and exceedingly above last year’s crop of 66.7 MMT. Informa’s view of Argentine corn stayed the same and is more in line with the USDA.

Soybeans traded on bearish news for the majority of the session; however a late comeback pushed them up into positive territory, + ¼, at 10.37 ½ (May). In Brazil, logistics with moving crop has proven to be a temporary challenge, affecting up to 600K MT (11 vessels). In Mato Grosso, one of the major roads used to transport grain to northern ports has been impacted by rains and wet conditions. However, it is not viewed to be a major stumbling block when one considers that Brazil exported 3.5 MMT in February, well above last year’s 2.0 MMT. Mato Grosso’s IMEA estimates the state’s harvest is 78.4% complete compared to 65.9% last year at this time. Informa increased their projections of the Brazilian soybean crop to 108 MMT from the previous 106.5 MMT. This exceeds the USDA and CONAB which came in at 104 MMT and 105.6 MMT respectively. To put this in perspective, last year’s crop ended up tallying 95.4 MMT. Informa’s estimate of Argentine soybeans is unchanged and more in line with the USDA.

Wheat had mixed results today with the soft red winter version finishing + ¾ at 4.53 ½. Kansas City and Minneapolis followed at +1 ½ and -6 respectively. Weather is a closely watched factor for wheat this time of year, as winterkill continues to be a concern with variable temperatures causing early emergence from dormancy and then dipping back below freezing. The central and western plains do not have any rain in the 7-day forecast. The Russian Ag Minister is looking for special permission to export up to 500K MT out of state reserves in order to free up some of their space ahead of another great yield. In France, the crop is also looking stellar, as the most recent ratings show conditions at 93% good to excellent. The Dollar is trending lower today, and coupled with a reflation mentality could support wheat on breaks.

Live cattle saw technical correction of its overbought condition with pre-established sell orders and technical selling, -.175 (April). Losses were blunted by strong wholesale beef demand and futures’ discounts to this week’s cash prices. Short-term cash fundamentals are a positive, but traders are also focusing on the potential spike in production expected in the 2nd quarter. It has been reported that packer margins were up over $20/head today.

Hogs are continuing to churn out production, and this will continue to provide pressure coming into spring. The April contract was down notably on sell stops and declining wholesale pork and belly prices, -1.525, with June following suit, -1.350. Long-term fundamentals are tending bearish. Packers have still been experiencing good margins and have continued to raise cash bids to keep the flow of hogs moving. Hog demand will be offset by Lent and increased by the start of grilling season over the next few weeks.

In other news from the 2017 Commodity Classic in San Antonio, TX - There is cautious optimism as well as trepidation being expressed by the American farmer. Rural America may have put Trump in office, but it remains to be seen how well rural America will be represented. Tough talk from the White House on trade has left some wondering when we will have the first bilateral trade agreement, as Trump prefers bilateral agreements with single nations rather than multi-nation agreements. About one-third of farmer income is based on exports. It is also essential that a Farm Bill is inked in the near future.


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

Water Street Solutions Daily Report 2017.3.2
2017-03-02T02:38

Corn was not able to repel the negative pull of soybeans today, -2 ½ at 3.79 ½ (May). Informa did not help the cause, as they announced numbers today showing 2016/17 Brazil corn production estimated at 91.0 MMT, up a full 2 million over the previous outlook. USDA weekly export sales announced today were at the extreme bottom end of expectations at 692K MT, compared to the expected range of 700-900K MT. Total sales are still up 57% over last year, but the pace has slowed significantly and may have a hard time keeping up, as sales last year were strong through mid-June. The corn/bean ratio is an indicator to watch. It is calculated by simply taking November soybean futures divided by December corn futures. The balance is considered in “equilibrium” if 2.5:1. It is used as a gauge to predict if acres will swap (but farmers will still plant what they want to if they can make a dollar). This year it is likely that the ratio will stay similar through planting at around 2.55:1. This will be monitored leading into the March 31st report.

Soybeans plunged sharply today, after bio-diesel “news” yesterday proved to be unsubstantiated and fund flows started to taper off, -14 ½ at 10.37 ¼ (May). The Renewable Fuels Association said they had heard from the White House that they planned to change the point of obligation regarding blending fuels, with a shift from a blender’s credit to a producer’s credit. While the White House denied the report, there is still speculation brewing that a change may be in the works. Informa announced their estimate of Brazil’s 2016/17 crop production forecast at 108 MMT, up 1.5 MMT over the most recent outlook. The news from South America seems to only get better and better, and only time will tell if the yield projections bear out the speculation. The USDA announced export sales within expectations of 300-500K MT at 428K MT. However, sales appeared better than they actually were, as last week’s soybean sales were revised lower. Also, there were no new crop sales this week, as the market was expecting 200K MT. To give an idea where we stand, soybean sales will need to average about 6.3 million bushels/week through the end of the marketing year in order to hit the target, which would be the highest average in the last seven years for which there was not a South American crop problem.

Wheat once again played “follow the leader”, as they could not muster a story of their own – down across the complex: Chicago -4 ¼, Kansas City -7 and Minneapolis -8 ½. USDA weekly export sales were not able to provide a spark as they were the lowest in six weeks, rounding out the bottom of market expectations at 353K MT compared to estimations of 300-500K MT. The US Dollar has once again rallied to highs not seen since early January, which is never a help to the export market. Weather will play a factor, and it should be noted that variable temperatures are not a plus for winter wheat, as this can result in damage to crops that have progressed well ahead of schedule due to unseasonably warm conditions. Also Russia, the world’s largest wheat exporter, is expecting a solid crop of 107 MMT, and with a stockpile to draw from last season as well for their export offerings.

Live cattle were influenced in today’s trading session by profit-taking and the idea circulating that wholesale beef prices may be reaching their peak. April cattle futures were down, -1.425 at 116.150, while feeders also plummeted, -1.825. Not all news is negative though, as cattle feeding margins have climbed to over $300/head. This is the 14th straight week of feed yard profits.

April hogs went higher earlier today based on technical buying and Wednesday’s cash price turnaround, according to traders. They ended up finishing slightly negative, -.150 at 68.275. Packers have still been experiencing good margins and have continued to raise cash bids to keep the flow of hogs moving. Hog demand will be offset by Lent and increased by the start of grilling season over the next few weeks.

In other news, the National Cattleman’s Association and other groups are praising the choice of Montana Rep. Ryan Zinke as Interior Secretary. He is viewed as common sense on land and conservation.


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

Water Street Solutions Daily Report 2017.3.1
2017-03-01T02:31

Corn had a volatile last day of February yesterday, with rumors surfacing about the possibility of a favorable ethanol edict from the Administration (funds were net buyers of about 20K contracts), that proved to be unconfirmed. Whether true or false, futures were able to build off the momentum with an even stronger bar today, +8 ¼ (May). The EIA ethanol weekly report was released today and it showed production unchanged from last week, but 4.8% above last year’s same week. Worth noting is the fact that production is well above the USDA’s 2016/17 estimates of corn for ethanol usage. At the current rate, ethanol usage would tally around 5.435 billion bushels compared to the USDA number of 5.350 – this is significant. Ethanol stock were up again over last week from 952 million gallons to 970 million gallons. Japan has been an active buyer of late, as they have recently dipped into their emergency corn stockpiles to fill the gaps left from logistics issues with imports.

Soybeans have found support from short-term focus on fund buying (new month fund flows) and the idea of higher bio-diesel demand, with a big up-swing, +16 (May). Reports yesterday suggested that President Trump was prepared to issue an executive order on renewable fuels, but the report was later denied by the White House. However, soybean futures soared yesterday before returning to more modest level gains by the end of the session. Today, as with corn, the rally re-started, with May soybeans finishing very strong at 10.51 ¾. The market has been in need of fresh news and the implication of higher soybean oil usage provided the impetus. The financial markets were also in an upbeat mood today, with overall optimism resulting from the President’s address to Congress.

May Wheat also rode the optimism of corn and beans with Chicago +13 ¼, Kansas City +13 ¾, and Minneapolis +11 ¼. Futures received support yesterday from a large Egyptian order which will source from the Black Sea region. Even though it is not a US sale, it will help diminish supplies from rival exporters and hopefully help allow the US future opportunities this year. Additionally, India has been stepping up to the plate recently, with purchases from Australia and Russia/Ukraine. Weather has also come into play again, as there are concerns regarding crop damage due to variable conditions of warmth (causing crop to mature) and then back to cold. Montana downgraded their crop from 70% good to excellent to 51%.

Live cattle experienced profit-taking which tamed market advances, finishing down slightly at -.350 (April). Packers are counting on spring grilling to help demand, while Lent usually counters with a 40-day damper on beef sales. Beef cut-out values have remained solid and cash prices are expected to be strong this week.

Hogs have been able to gain back some of their recent losses, propelled by short-covering and higher wholesale pork prices, mainly resulting from high belly prices. April futures rounded out the session at 68.425, +.825.

In other news, investor optimism following President Trump’s address to Congress sent the Dow Jones through the roof – easily eclipsing the 21,000 mark for the first time. His comments on “massive tax relief” and $1 trillion infrastructure investment were well received, as well as the manner in which the speech was delivered.
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

Water Street Solutions Daily Report 2017.2.28
2017-02-28T03:09

Fireworks started the day trade from rumors of an impending executive order from the President regarding the RFS mandate. The plan is reported to block biodiesel imports from qualifying for blender credits and would shift the point of obligation for blending away from ethanol refiners. 

Corn exploded this morning on the RFS news, sending new crop corn into new highs for the move but wasn’t able to maintain the gains into the end of the day. May corn closed +5 ½ at $3.73 ¾. Funds were strong buyers in corn which has uncovered more old and new crop selling. Price discovery for corn finishes today at an unofficial $3.97. On the charts, yesterday’s swing low will be watched by the trade as a low to hold to continue the uptrend. Closing in the lower half of today’s trading range was a disappointing finish but the action demonstrates the underlying volatility of even a large supply market.

November Soybeans traded nearly 26 cents higher on the news of changes in the biodiesel incentives but couldn’t hold strength past noon, finishing May +13 ¾ and November +12. Soybean base price discovery ends today at an unofficial $10.21.

Wheat tagged along with the grain and oil seed rally, but was not able to sustain strength. July Chicago finished +6 ¼, KC July +5 ¼ and Minneapolis May +2 ¾. Questions over the early breaking of dormancy continues to beg the question in winter wheats if there will be a March scare. Plains wheat ratings continue to run under last year levels. Cash trade found Egypt as a buyer of 235,000 mt of Russian wheat, 120,000 mt of French wheat and 120,000 mt of Romanian wheat. Yesterday’s low in the wheat markets will be seen as a swing low to hold if the uptrend is to remain intact.

Live cattle found strength again with April finishing +2.425 at 117.925. Feedlots are showing 215,000 head compared to 225,000 head last year. Strong beef demand is helping to provide general market support as we are slaughtering 10% more cattle than a year ago. Steer carcass weights are also well under year ago levels at 879 lbs. Feeder futures continue to run at discounts to the cash market.

Hogs had a relatively quiet day with April losing -0.525 to finish at $67.60. Lower Belly values softened up the front month futures while summer months continue to wrestle with large incoming supplies but strong export expectations.

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

Water Street Solutions Daily Report 2017.2.27
2017-02-27T02:31

Corn closed lower ahead of first notice day in the March contract but off the session lows. May -2 ½ at 3.68 ¼ . Brazil may have gotten more rain than needed, with 2nd crop plantings getting behind schedule, but nothing that is influencing the market in a meaningful way. Weekly inspections were announced by the USDA this morning, and they showed corn well above expectations at 1.461 MMT compared to estimates of 1.050 MMT. Of some concern, Mexico is sending a trade delegation to Brazil next week to discuss sourcing them as an alternative to the US for corn (and other commodities). Mexico has traditionally been the largest buyer of US corn, but is troubled by the US indicating they want to “unilaterally change the established rules of the game”. Chinese imports of DDG and ethanol were exceptionally small in January, due to the sharp rise in import taxes. The Commitment of Traders report released Friday showed managed money long 92,216 contracts, up 6,856 and index funds long 280,745, up 11,359. Look corn to find a footing the next three cents. Keep an eye on 3.75 ¾ May as a trigger for corn to move into higher ranges.

Soybeans traded mostly lower but finished off its lows with May -2 ¼ at 10.22. Preliminary acreage estimates are bearish with another 4+ million acres of plantings more than last year expected in the US. Not helping the cause is slowing Chinese demand (no new sales announcements again this morning) and the rising production estimates for South America, particularly Brazil. USDA weekly soybean inspections came in below expectations at 704,945 MT vs. 875K MT. On Friday, the Commitment of Traders reported managed money positions as soybeans long, 154,307 off 16,361, with index funds long 120,356, off 2,509. May was able to hold above the 200 day moving average. Look for a close above 10.36 May to shift the market back friendly.

Wheat has not shown a sign of a short-term low yet, and spring weather will be a crucial factor yet to play out. May Chicago closed close to its lows down -9 ¼ at 4.38 ¾. India is expecting wheat production for 2017/18 to set a new record, at around 96.6 million tonnes. If so, will the Indian government reinstate import duties? This will be worth watching and will affect the export market. USDA weekly wheat inspections were pegged at 537,877 MT compared to expectations of 450K MT. The Commitment of Traders Report on Friday showed managed money short wheat 27,385 contracts, off 12,662, while index funds were long wheat 85,258, off 4,824. Look for May wheat to shift friendly again on a close above 4.48.

Live cattle is receiving support led by bargain buying of forward months with discounts to cash and a fairly tight supply for March coupled with good beef demand. Behind the tight March supply is the largest drop in production from the 4th quarter to 1st quarter on record. Longer term production could be a bearish factor as the USDA is predicting an increase of 2.9% over last year. But, on the other hand we are slaughtering 10% more cattle currently than last year. The Cattle on Feed report on Friday afternoon lacked any surprises: On-Feed 101% (est 100.7%), Placements 111% (est 111.1%) and Marketed 110% (est 109.8%). The Cold Storage reports has beef stocks at record high levels for this time of year.

Hogs got momentum from short-covering and higher pork wholesale prices. The USDA is forecasting pork production up in 2017, to a record high, with a 4.9% increase over last year. April hog futures are currently at large discount to cash, well over double the premium demonstrated by the 5-year average.

Today is “Position Day” for March futures as First Notice Day is tomorrow.

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

Water Street Solutions Daily Report 2017.2.24
2017-02-24T02:30

Corn traded lower most of the day session, closing Mar -1’4 (364’0). The USDA Outlook Forum gave us more of their mindset this morning, as they estimate 2017/18 corn production at 14.065B bushels (15.148 last year), yield at 170.7 bushels/acre, ending stocks at 2.215B bushels (2.32 last year). Reminder though that their Outlook does not include any farmer surveys. USDA export numbers released today showed sales at 743,100 MT (net 264,500 MT) compared to expectations of 1.1-1.5 MMT. Chinese ethanol imports for the month of January were down 94% from last year due to them removing preferential tariffs on US and Brazilian ethanol. First notice day is Tuesday for the March contract. In the charts, to maintain the uptrend the May contract needs to hold above the $3.63 swing low (today closed $3.70’6). Upside resistance in May will be in the $3.87-$3.90 zone.

Soybeans closed Mar +0’4 (1013’4), halting the streak of red closes for now. The USDA Outlook Forum had soybean production is pegged at 4.180B bushels (4.307 last year), a yield of 48 bushels/acre (52.1 last year), crush 1.945B bushels (1.950 last year), exports of 2.125B bushels (2.100 last year), and ending stocks unchanged at 420M bushels. The USDA export sales announced this morning showed 413,600 MT (net 28,700 MT) vs expectations of 750K -1.2 MMT. There were no new sales announced this morning, and it has been 10 days since the last one. Today, March options expire with beans featuring the two largest open strikes at $10.20 and $10.00 puts. May soybeans have moved into an oversold condition on the charts. Next week will need to hold above $10.12 on a closing basis.

Wheat, like corn, traded lower today Chi Mar -6’6 (431’2). Wheat exports announced by the USDA today were strong, showing sales at 451,300 MT (net 256,500) vs expectations of 300K-600K MT. The wheat complex needs a constant flow of fresh news to keep it motivated. Some conflicting forces on the market include the USDA Outlook Forum’s rather uninfluential numbers, IGC news that import demand will be down from several countries including Algeria, Egypt, and Morocco, disappointing EU weekly sales, chatter again of dry conditions across the southern Plains, and strong US weekly export sales. Buyers this past week included Japan, Algeria, Mexico, Sri Lanka, Peru and the Philippines. Look for wheat to follow corn and beans direction. March options expire at the close of business today.

Live cattle were higher in Feb +0.675 (123.750) but lost ground in the deferred months. The Cattle on Feed report this afternoon lacked any surprises: On-Feed 101% (est 100.7%), Placements 111% (est 111.1%) and Marketed 110% (est 109.8%). The Cold Storage reports has beef stocks at record high levels for this time of year. Conversely, there is thought that supplies could remain somewhat tight in the weeks ahead.

April hogs bounced back today closing +1.450 ($68.025). They received some short-term support from the futures discount to cash, which stood at 11.32 cents coming into today’s trade vs. the five year average of 3.15 cents.


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

Water Street Solutions Daily Report 2017.2.23
2017-02-23T02:22

Corn was not able to win the tug-of-war with the bears today, closing below the 200-day moving average, -5 ¾ ($3.725 May). Corn found some support in the USDA Outlook Forum’s acreage projection, as they have corn planted acres at 90M vs 94M last season. However, the end of March will bring more clarity, as last year the prediction was also 90M acres but actual came in at 94M. The average corn price/bushel is estimated to be $3.50 for 2017. It will be worth watching how cheaper supplies in Brazil and Argentina affect the balance of power among world sellers and buyers. At this time, it is thought that South America cannot compete with the US for Mexican corn business, as they are still running at close to a 15% premium when all factors are considered. The EIA weekly ethanol reports showed production down to 304M gal/wk compared to 306M last week, but still 4% above last year. Ethanol stocks increased again to 952M gallons from 945M, now back to near record levels.

Soybeans did not receive the acreage news well today, with May futures down, -11 (10.22’4). The USDA Outlook Forum pegged bean acreage this season at 88M acres, which would be 4M acres more than last year. Soybean average price was penciled in at $9.60/bushel. Global 2016/17 corn crop is expected to be 1.049 BMT, according to a release by the International Grains Council yesterday. This is an increase of 4 MMT over the previous outlook. Agroconsult is promoting the idea that Brazil’s soybean production should hit 108 MMT vs the USDA 104 MMT and that exports should exceed the USDA projection of 59.5 MMT by over 1 MMT. They have already shipped 3.8 MMT, with another 3 MMT already on the books for next month. Not only that, but the dry conditions are speeding up harvest. Will May soybeans finish the week with a 6th consecutive low tomorrow?

May wheat was able to generate minimal momentum in spite of positive news regarding acreage and exports: Chicago -2 ½, Kansas City + ¼, Minneapolis +1 ¼. The USDA Outlook Forum’s estimates for wheat acres confirmed current thinking of record low numbers, as they predicted 46.0M acres planted this season vs. 50.15M last season. Average price seen in 2017 is expected to be $4.30/bushel. On a global scale, the International Grains Council left overall 2016/17 wheat production unchanged from the previous outlook, at 752 MMT. Two areas of interest include Australia, which is expecting to obliterate their previous records, as well as Kazakhstan (where the best quality wheat in the world grows), which reduced their production outlook. Keep an eye on support levels at $4.415 and $4.33 May.

Live cattle remained in an uptrend in today’s session, +.450 (April). The deferred futures are offering up $13-16 discounts with the surge in cash prices. Later in the summer the market could get weighed down with supplies considering the surge in placements over the winter, as the USDA Outlook Forum gave their 2017 beef production forecast of 26B lbs, which is 3.1% up over 2016. The diversity of export destinations should help cattle, as world demand is strong. Terry Branstad, the Governor of Iowa and Trump’s choice to be his ambassador to China, indicated he will make opening doors for beef exports to China a priority when he begins his term. He feels strongly that there is no good reason why the Chinese should continue to restrict US beef, considering Mad Cow Disease is long in the past.

Hogs have experienced a steep decline on long liquidation selling the past two sessions, -$1.175 (April). Futures found weakness in a sharp decline in pork belly prices as well as doubts about the US being able to sustain the strong pace of exports. The National Pork Board is increasing their focus on growing export markets with a 13% increase in funding to promote pork. It is crucial that demand stays strong to keep prices from declining later in the year due to abundant supplies. The USDA Outlook Forum pegged pork production for 2017 at 26.2B lbs, up 4.9% over last year. Will we see another 10-12% come off hog futures in the coming weeks?


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

Water Street Solutions Daily Report 2017.2.22
2017-02-22T03:08

Corn continued to regain some of the ground it lost last week, +1 ¾ (May). Corn received mixed news in exports, as South Korea put in an order for 55K MT (likely US) while the USDA also reported a cancellation of 136K MT of optional origin corn sales to South Korea. What will the USDA Ag Forum offer up for acreage estimates for corn?  Last week’s USDA baseline estimate pegged acreage at 90.0M acres, while analysts average estimates are around 90.8M acres. If true, ending stocks would be in the neighborhood of 2.003B bushels compared to 2.32B bushels this season. May close in resistance is at $3.804 and $3.82 with close in support at $3.696 and $3.654.

Soybeans were down again for the fourth consecutive session, -3 ¾. The markets are hungry for news. The USDA should offer up something to chew on this week, as they will release a new 2017 planted acreage estimate. This should be a better indicator of producer intentions than recent ten-year history, although definitive numbers will not be known until near March 31st. A Bloomberg survey of industry experts showed an average estimate of 88.3M acres, ranging from $86.5-$92.5. There are some areas of South America that are too wet, but that does not seem to be enough to stem the tidal wave of predicted crop yield bearing down. Brazil corn crop is estimated by the weekly roundup at 87-88 MMT vs USDA estimate of 86.5 MMT, while Argentina is spot on pace with expectations at 36.5 MMT. Long liquidation selling is the trend, with close in resistance at $10.45, $10.126 and $10.086 next downside support (May).

Wheat led the grains today, as they were up across the board with Chicago +6 ¼ , Kansas City +5 ¾ , and Minneapolis +3 ¼ (May). Wheat is under a bigger influence by weather than normal, with a backdrop of lower acres. Last week’s USDA baseline projection had wheat acres at 48.5M. However, a Bloomberg survey showed analysts with a different opinion, as they pegged acres on average at 46.45M, with a range of 41.3-52M acres. Either way should result in lower ending stocks than this season. India is considering bringing back its import duty on wheat, to help alleviate the burden of their expected record crop of 96.6 MMT. And, Egypt is back in the hunt for various grades of wheat, tendering for 120K MT. Look for $4.414 as close in support and $4.604 as close in resistance (May).

Live cattle got a boost from cash markets, finishing +.775 (April). Cash cattle traded at $124 in TX and NE. Also providing support were tighter supplies in the Plains and improvement in packer demand as a result of a boost in beef prices. Is the market still somewhat under-valued? Increasing beef prices and a large discount of futures to cash are indicating “yes”. The Cattle on Feed report will be out on Friday with estimates of on-feed at 100.7%, placements at 111.1%, and marketings at 109.8%.

April hogs were sharply lower, on weakness in cash bellies (down over $10) and hefty supplies, -$2.60. Bearish technical developments also played a role, as hogs gapped lower at the open and continued to a new low not seen since Jan 26th. Pork cut-out values were down $1.48. Warm weather is boosting weights and colder weather coming may provide some support. In exports, China and Mexico will continue to play a prominent role. Two topics to watch include: China buying more pork due to their bird flu issues, and the possibility of slowing trade with Mexico (who has been a big buyer of US pork in recent months). Watch tomorrow’s action for follow through on recent break.


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

Water Street Solutions Daily Report 2017.2.21
2017-02-21T04:01

Corn traded on both sides of unchanged and was able to muster enough energy to stay positive, +1 ½ (369’6 March). Weekly corn inspections reported by the USDA this morning were pegged at 1.152 MMT, slightly below the 1.2 MMT that were expected. Corn had two sales announcements by the USDA – a private sale of 269,296 MT of corn to Japan as well as 111,200 MT of corn sold to “unknown”. There seems to be plenty of demand under the market, but supply keeps growing. News out of South America continues to show good weather as well as an optimistic harvest prediction. Argentina’s Climate and Water Institute reported that their corn and soybean crop is reaching a milestone stage of development in ideal conditions, and that they are expecting possible record yields. China has also been able to market some of their huge stockpiles to Japan, due to shortages caused by lengthy delays of cargos out of the northwestern US. Japan is expected to tap into emergency feed piles as they are at critically low levels. Watch $3.62 March as a key level of support.

Soybeans did not have enough positive news to offset bearish mindsets, -6 (10.26’4 March). Until we get more definitive information on a possible acreage shift around March 31st or a change in South American weather, soybeans are likely stuck in a $.20-$.30 range. The market is long and March will be going off the board in the near term. Farmers are very “sold” on new crop beans, ranging from 50-60% to as much as 100% in some cases. Keep an eye on $9.80 as the “bull – bear” line and also on $10.35 to the upside. A breach of either will have impactful ramifications.

Wheat is coming off a reversal last week and is showing some signs of having made its run, with Chicago -5, Kansas City -4, and Minneapolis -5. The dollar’s strength also contributed to weakness (up over 101). But, on the bright side, the USDA reported a private sale of 138,650 MT to “unknown” destination. The USDA also showed weekly inspections in positive territory, with 558,252 MT reported compared to the expected 450K MT. Global supplies are at a high level and concerns of winterkill in Russia and here in the states have somewhat subsided. Wheat is a follower of corn and soybeans and will be looking to them for direction. Close in support for March wheat is in the areas of $4.38’4 and $4.32’4.

April live cattle gapped higher today on buy stops and technical buying (+.375 April), led by yesterday’s firmer wholesale beef values and futures’ discounts to last week’s cash prices, per traders. According to the USDA, wholesale beef prices were up 42 cents cwt over Friday, and select cuts were up sharply to $190.40 from $116.

April hogs continued to trade in a range, finishing in negative territory, as prices were supported by Monday’s higher cash and wholesale pork prices, -.425 (April). The USDA reported that the average wholesale pork price was up 81 cents per cwt from Friday, mostly influenced by pork bellies. Packer margins are still a positive $14.60, but down significantly from $21.50 last week.


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

Water Street Solutions Daily Report 2017.2.20
2017-02-20T01:56

Markets were closed today in observance of Presidents' Day.

In corn news, the Commitments of Traders Report on Friday afternoon showed managed funds increased corn long from 57K to 85K+. Japan is looking to China to help replenish its dwindling corn inventories, as cargo delays from the northwestern US have put them in a tight spot, as they are expecting to tap into their emergency feed piles to supplement the critically low levels. Here stateside, it has been reported that farmers advanced old crop sales from 50% to near 66% on the recent rally. Producers are looking for CZ17 $4.20-$4.25 to sell more new crop. Corn needs to hold support around the $3.62 area (March), with $3.84 as a nearby target.

Soybeans gave up the most of the grains last week, down 24.25 cents. The markets have been heavily focused on South American weather and crop, which have not given any reason to boost optimism. Mato Grosso (Brazil) reported their soy harvest on Friday at 52%, while safrinha corn plantings were at 58.4%, both well above average progress. The Commitments of Traders Report showed an increase of soy’s long position by managed funds up 20K+ contracts to 171K. In the US, it has been reported that old crop soy sales are now up to around 90%, while new crop is pegged at 25-30%. Will soybeans be able to get back on track tomorrow, with the 3-day weekend and risk-off mindset behind them? It is likely they will continue to chop in the $10.17-$10.80 range where they have been for the last month until more definitive information is available from South American yield and the acreage battle with corn.

The Commitment of Trader's Report had wheat's short position down 43K to -40K, among managed funds. US winter wheat has showed signs of breaking dormancy, with the warm temperatures across the country. Wheat is overbought and showing signs of a short-term peak in place. Look for wheat to seek direction from corn and beans, as wheat is a “news” commodity.

Has live cattle seen enough of a pullback for now? April cattle was able to get up and through a trend line Friday , look for more broad range trade over the next two weeks between the $111.00-$120.00 area.

Hogs are showing signs of running out of energy and looking for consolidation, as indicators are showing bearish divergence. The market has been driven recently by pork bellies and demand for bacon, propelling packer margins higher.







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

Water Street Solutions Daily Report 2017.2.17
2017-02-17T01:48

May Corn continued yesterday’s afternoon session break to the downside, finishing 3.75’4, –5 ½ and 3.94’2 Dec, -4 ¾. The focus seems to be on profit taking – will we see any follow through next week? From a technical standpoint, the hook reversal with continued selling in the overnight to confirm a high is not a positive sign. Corn entered today overbought, with a net long position estimated at 31K contracts, and with a big supply to absorb. In export news, Japan continued to rebuild its low corn inventories today, as the USDA reported a private sale to them of 194,112 MT of corn, with about a third for 2016/17 and the rest for 2017/18. Look for resistance at 3.83’2 and nearby support at 3.72’6 and 3.68’2 in the May.

May Soybeans continued to shed recent length down to 10.43’2, -11 ½. Soybeans have been battling the bears in broad range trade, and it looks like they may be starting to succumb to weakness from positive South American weather and yield reports, rumors of significantly planted acres this spring, and overnight bird flu demand issues in China, etc. Will long liquidation selling continue into next week? Keep an eye on key support levels in the 10.30’4 and 10.12’6 areas in the May contract.

March Wheat could not build positive momentum today, with Chicago’s soft red winter coming in at 4.41’0, down -6 ¾. KC and Minneapolis also posted losses on the board. Wheat is overbought, showing signs of a short-term peak in place. Wheat has seen positive export numbers, record low acres of winter wheat plantings, as well as reports of winterkill in some areas of the US and Russia. However, the burgeoning supplies and stiff competition for global business with an overall strong Dollar, have kept things in check. Today, traders said that Egypt’s GASC bought 360K MT of Russian, Ukraine and Romanian wheat. Look for a possible technical correction in the short-term. Close in support for March wheat is in the areas of 4.38’4 and 4.32’4.

April Live Cattle experienced sideways action finding support in short-covering and futures’ discounts to expected cash prices this week, before finishing -.250 (April). The Fed Cattle Exchange yesterday produced prices in the $118.50-119.25 ranged, which was up from last week’s $117.50. Putting a damper on the FCE sales was the lack of sales from Nebraska, where prices were lower last week due to animals carrying mud. It was reported that some processors cut their production due to poor margins and uninspiring beef demand. The USDA Slaughter data today will help provide some clarity.

Hogs were also able to regain some of yesterday’s losses on short-covering, +.950 (April). The cash market needs news to feed its advances, i.e. continued climbing pork belly prices or positive export opportunities. It appears that there is a potential shift of US exports to China from Mexico, as China continues to exhibit an insatiable appetite for pork (as well as beans). Once again, it is worth mentioning, that trade policies and agreements from the new Presidential Administration will be key. As the new Cabinet members are confirmed and firmly in place, hopefully uncertainty will be less of a market influencer.

In other news, the Senate confirmed Scott Pruitt to head the EPA, with the vote aligning mostly along party lines. Stay tuned for future direction, as concerns voiced by the ag industry center around ethanol policy and how the new administration will balance its loyalties to oil and agriculture.

The markets will be closed Monday, in observance of President’s Day.


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

Water Street Solutions Daily Report 2017.2.16
2017-02-16T03:32

Corn has been trading bullish based on fund buying, more so than changes in fundamentals, as open interest is up 53K contracts after yesterday’s rally. However, this did not continue today as weakness in the market from beans and wheat were the trend of the day, as March corn finished -5 ¼. The USDA released its weekly export sales report, and corn came in under expectations, at 784 MT compared to the expected 900K-1.1 MMT.  Japan sales made up the lion’s share, while Mexico disappointed with only 69 tonnes. Of greater concern in the bigger picture, is Mexico looking to Argentina as a possible source for corn, due to concerns over NAFTA re-negotiations and the ongoing trade war with the Trump Administration. China is also getting in on Japanese corn demand, as they had their first sale in ten years of 25-50K MT. Delayed corn shipments from the US have pushed Japan to consider their emergency stockpiles, as corn inventories are at very low levels.

Soybeans have little fundamental reason to extend gains, succumbing to bearish forces today,  -17 ½,   (Mar).  Open interest leading into the session was at a respectable level at 9K, but not anywhere near corn (53K).  Soybeans appeared to have a breakout export report, with 890 MT announced, well above market expectations of 500-750 MT. However, that number does not take into account any readjustment from the USDA’s revised sales last week from 537 MT initially to 384 MT. If the revision is figured in, sales this week were still the highest in the last four weeks. Sales to China are experiencing seasonal decline, as they only accounted for 99K MT, which included the cancellation of 81K MT previously reported. Helping the export cause is the strong Brazilian real, which has been trading at new highs. However, this was not enough to overcome favorable South American weather and yield reports. Will beans be able to test resistance at 10.80 before the end of the month?

Wheat was down significantly across the complex today, led by a deep break by MN, with Chicago -7, Kansas City -11 ¼, and Minneapolis -18. The Chicago contract failed to hold support above the high of its 20-day Bollinger range and also fell below the 200 day moving average, as traders focused on profit-taking. Wheat exports provided some positive news today, as the USDA announced weekly export sales above expectations at 569K MT compared to estimates of 300-500K MT, the 2nd highest in seven weeks.

Live cattle experienced sideways action finding support in short-covering and futures’ discounts to expected cash prices this week, before finishing -.250 (April). The Fed Cattle Exchange yesterday produced prices in the $118.50-119.25 ranged, which was up from last week’s $117.50. Putting a damper on the FCE sales was the lack of sales from Nebraska, where prices were lower last week due to animals carrying mud. It was reported that some processors cut their production due to poor margins and uninspiring beef demand. The USDA Slaughter data today will help provide some clarity.

April hog futures peaked mid-morning before heading lower, -.950 (April).  Cash and wholesale pork prices have been trending up. Packers have been motivated to raise cash bids due to short supplies and solid overall pork demand. It does not appear that the protests for “Day Without Immigrants” has resulted in plants reducing hours or shifts. Will futures finally roll over to the downside as has been expected from the near term top?

In other news, China is reporting that their government will shell out almost $250B to boost land quality. They expect to add 66 million acres of farmland by 2020. In US news, President Trump announced the appointment of former NLRB member, R. Alexander Acosta, as his new Labor Secretary nominee.

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

Water Street Solutions Daily Report 2017.2.15
2017-02-15T02:52

Corn recovered from the weakness in the overnight session reaching its highest price since June 30 and closing (+X). The Energy Information Administration (EIA) released the weekly ethanol update. As expected, production declined from 1.055 million barrels/day to 1.040; however, it continues to be much stronger than USDA corn demand estimates. The report also identified that despite the production decline stocks continued to rise reaching the highest since March 2016.

Soybeans opened the day slightly below yesterday’s close and gained some momentum throughout the day closing near the session high at (+X). Recent price strength is technical and influenced by investment fund money flows rather than substantial changes to fundamental factors. The National Oilseed Processors released reports on soybean crush, soymeal exports and soyoil stocks. Its members crushed 160.621 million bushels during January, up from 160.176 million bushels in December. They exported 891,143 tons of soymeal down from 949,615 tons during December, and reported soyoil stocks of 1.629 billion lbs as of January 31, up from 1.434 billion lbs at the end of December.

Wheat made a comeback today closing near the high at (+X). Hard red winter wheat spot basis bids were unchanged in the southern U.S. Plains as futures hovering near their highest levels since June enticed some farmers to sell. In world news, Russian farmers have large quantities of wheat available to sell however; the strength of the Russian ruble is slowing export sales. Euronext wheat futures rose to fresh six-month highs on Wednesday, supported by hopes that a weakening euro will boost exports.

Live cattle traded above the open briefly, but ended the session near today’s low closing (-X). The USDA Daily Slaughter Report shows that this week’s 111,000 cattle is considerably higher than this week last year at 101,000.

Hogs posted positive gains today closing (+X). The April contract is currently benefitting from additional buying stirred by Tuesday's firmer cash and wholesale pork values. The USDA reported Tuesday afternoon's average cash hog price in Iowa/Minnesota at $72.38 per cwt, $1.00 higher than on Monday. Both good pork demand and profitable margins offer incentives for packers to put as many pigs through plants as possible.


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