Water Street Solutions
Water Street Solutions Daily Report 4.24.14
2014-04-24T02:32


Corn

Corn prices tried to push higher early in the day, but buying interest dried up at chart resistance between $5.07 and $5.08. Failure to sustain a move to levels above the top of the recent trading range led to weaker prices due to profit taking. Traders want to see greater evidence that this year’s wet pattern will be sustained over a long period of time before moving to new highs.

Soybeans

November soybeans bounced off chart support near $12.10 today, with traders unwilling to push below the support until they get greater clarity on this spring’s weather pattern and get greater clarity on the direction of the corn market. Meanwhile, the May contract was under pressure for much of the day on continued talk of soybean imports, but it rallied in the final minute to post a 3-1/2 cent gain.

Wheat

Wheat prices posted double-digit gains today. Much of the chatter was about rising tensions in Ukraine, but Kansas City’s strength relative to Chicago suggests that there was more to it than just Ukraine. Overnight rains were again disappointing for dry areas of the hard red winter wheat crop, with an industry tour scheduled for the belt next week.

Beef

June live cattle futures finished the day near session highs, just below an area of resistance near $136. Traders hope to get greater direction tomorrow from both the cash market and USDA data, but today’s close near session highs was positive. Meanwhile, the feeder cattle market showed even greater strength on strong cash demand. The latest CME index was up $0.22 to $177.35, although some markets were much stronger. The lead May contract has strong resistance at $180.60.

Pork

The May lean hog contract pulled back today after failing to take out Wednesday’s high early in the day session. June turned lower after failing to uncover many buy stops when it probed to a new contract high of $127.70. This leaves a double-top on the charts if we fail to see prices quickly move back above that level in the days ahead.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 4.23.14
2014-04-23T04:28


Corn

Corn basis is firming in many markets on solid demand amid slow farmer selling as producers focus on getting the 2014 crop in the ground. Added support for the deferred contracts comes from fears that the weather will again turn cold and wet, slowing progress over the next 10 days to two weeks. Additional upward momentum came late morning when the midday models suggested a wetter outlook, particularly for late in the two week period when traders thought the pattern might open up again.

Soybeans

Spread trading added support to the deferred contracts on planting concerns, while pressuring the nearby contracts. That doesn’t make a lot of fundamental sense, since planting delays at this point would likely shift more corn acres to soybeans, if in fact those delays become that significant. Yet, fund managers don’t always follow logic and the seasonal indicators are supportive for November soybeans.

Wheat


Rain chances are expected to increase in the Plains tonight, and again on Sunday and Monday, favoring Nebraska and northern and eastern Kansas, but avoiding the driest areas of the belt. The GFS model calls for better coverage in central Kansas tonight and in Oklahoma early next week, but this model has had a wet bias of late. Furthermore, the midday run of the GFS model pulled back on moisture for the Plains. As such, we could very well carry this week’s stress into next week’s crop tour.

Beef

Live cattle futures pushed higher today on ideas that this week’s cash market would firm. Gains were modest, with the June contract consolidating higher near the $135 level. Added support came from Tuesday’s USDA cold storage report, showing beef supplies in the freezer down nearly 21% from the previous year.


Pork

Carcass weights hit a new record high of 218.24 pounds at the end of last week, before slipping just below that level this week. Carcass weights are running roughly 5% above previous year’s level. Traders had thought that the added weight was offsetting declining hog numbers due to the PED virus until they saw Tuesday afternoon’s USDA cold storage report. That report showed pork in the freezer was down more than 11% from year ago levels and down 12 % from the previous month, suggesting that retailers are having to pull from the freezer to meet consumer demand.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 4.22.14
2014-04-22T02:26


Corn

We saw a bit of a technical bounce today, as traders chose to consolidate prices around the key $4.90 level until they see how rain delays of the next week to 10 days unfold. Those delays are expected to focus primarily on southern and western portions of the Midwest. Sharply colder temperatures are also expected the middle of next week.

Soybeans

Weakness returned today on trade chatter of U.S. soybean imports combined with talk that China will soon begin auctioning off soybeans from its reserves. That’s always considered bearish by the trade, but China usually times its auctions to reflect times when cash supplies are tightening. The upcoming auction is said to focus on 110 million bushels of 2011 soybeans in reserve.

Wheat

Wheat prices traded both sides of unchanged today, after the key Kansas City July contract bounced off support at the 40-day moving average on Monday. The contract dipped briefly below the rising indicator today, but traders were unwilling to add to losses below Monday’s lows, leading to short-covering and bargain-hunting buying. Sentiment remains bearish, but wouldn’t be surprised if we see traders add a little risk premium again ahead of next week’s industry tour of the Plains hard red winter wheat crop.

Beef

Live cattle futures found support today from ideas that cash trade could firm this week after several weeks of breaking lower. Estimated packer margins put losses at $45.15 per head, up from losses of $77.95 the previous day an up from estimated losses of $139.90 per head on April 14.Packer margins are improving thanks to strong domestic and export demand. Product movement improved over the past couple of weeks as prices came well off their record highs set in March. Now prices are strengthening as well, improving packer margins. Futures prices have been trending lower, even though at a discount to the cash, because the cash was trending lower.

Pork

The lead May lean hog futures contract came under pressure once again as the cash market continues to erode. The latest CME 2-day lean hog index dropped another $1.21 to $119.65 per cwt. It was the 12th straight business day with a lower index, with losses over that period totaling $10.70 per cwt or 21% of the previous rise. The index is expected to remain under pressure near-term, with today’s cash market mostly $1 lower once again.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.


 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 4.21.14
2014-04-21T02:14


Corn

Overall, the trade expects the crop to go in the ground next month, leaving little reason to sustain a rally amid projected old-crop stocks of more than 1.3 billion bushels. Both the May and December contracts broke below chart support at $4.90, although the December contract firmed to settle back at that level. The May contract broke below trend line support that has held the market this calendar year, while the December contract held just above it.

Soybeans

Soybean prices saw double-digit losses today amid widespread selling of the commodity sector and profit taking following recent sharp gains. Export data provided little reason to go against the tide of selling. Even so, the lead May contract failed to see significant chart damage following recent sharp gains, although the November contract appears a bit weaker. Soybeans still need to be sure to hang onto necessary acres, but the contract doesn’t need to rally to do the job if December corn is going down.

Wheat

Traders believe that rains in the forecast will save the crop, which has been the case for several weeks, even though it’s getting too late for some of the wheat to respond. Next week’s tour of the Plains’ crop should settle the debate over the crop’s condition, but for now traders want proof that selling is wrong amid bearish chart signals.

Beef

Live cattle futures came under additional selling pressure today, with added pressure coming from money flowing out of the commodity sector at large. The cash market continues to erode lower from week to week. It’s still at a premium to the futures market, but declining cash does little to reverse bearish sentiment near-term in the meat sector. Last week’s trade was mostly $1 to $2 below the previous week.

Pork

Most packers took the Good Friday holiday off ahead of Easter, with others using today as a floater holiday. As such, demand for hogs for slaughter declined, adding pressure to the cash market. Today’s cash market was mostly $1 to $2 lower at the terminals, which should continue to weigh on the CME cash index. The lead May lean hog futures contract continues to climb upward above the 40-day moving average, currently at $120.32. A break below the indicator would likely uncover sell-stops that would likely target a test of the April low at $114.79. The cash market had been trading at a premium to the futures market, providing support, but that relationship is now being reversed.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 4.17.14
2014-04-17T03:32


Corn

Corn futures posted modest losses today as the planting window begins to open up. Demand for corn remains strong, but we’re still not worried about running out of corn ahead of this year’s harvest. As such, sustaining a rally beyond recent levels would likely necessitate a legitimate threat to the new-crop. Both the May and December contracts dropped below their recent trading ranges, although they remain above support at $4.90. Nonetheless, prices remain vulnerable if the weather pattern continues to open up next week, suggesting higher yield potential and the possibility of acres coming back to the feed grain.

Soybeans

The lead May soybean contract rallied 70 cents this past week, so some profit taking ahead of a three-day holiday weekend was anticipated. However, the contract rallied late to eliminate much of the day’s losses, giving it a decent close. The market, be it futures or basis, still needs to provide sufficient incentive to increase imports substantially in the weeks and months ahead. There were added rumors about Chinese defaults today, but the market needs to encourage those South American bushels to come north. Meanwhile, November saw modest strength on fears that an opening corn planting window might shift some acres back to the feed grain.

Wheat

Wheat added a bit of risk premium today ahead of the three-day holiday weekend on the fears that something might happen in Ukraine over the next several days while the market is closed. Added support comes from concerns about the winter wheat crop, but it will be a couple weeks before we have a good handle on freeze damage. Meanwhile, rains in the Plains continue to disappoint. Look for choppy trade to continue leading up to the Wheat Quality Council’s tour at the end of the month, when we should get a better picture of losses in the Plains crop.

 Beef

Feeder cattle futures followed the lead of the fat cattle market today. The lead April contract found support from a strong upfront cash market, while the deferred contracts came under greater pressure on fears that the high may be behind us in the fat cattle market. April feeder cattle remain just above trend line support that has held this market since the first of February, while the May contract broke below that support today. The latest CME cash index dropped $0.12 to $179.63 per cwt.

Pork

Cash hogs were mostly $1 to $2 lower today, keeping pressure on the lean hog index. The latest index was down $1.04 per cwt to $123.08 today. It was the 8thday for the index to be lower, after gaining ground for the previous 52 trading days. The index has declined $6.23 per cwt over the past 8 trading days, retracing 12% of its previous run.

 Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.


 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 4.16.14
2014-04-16T02:02


Corn

Corn futures tested the top of their recent trading range on Tuesday, but were unwilling to push prices higher with a 1.3 billion-bushel carryover and improving field conditions over the next week. As such, they pushed prices lower today to test the bottom of that trading range. The move speaks to the vulnerability of this market if no legitimate threat emerges for this year’s crop. Key support remains at $4.90 for the Lead May, as well as December contracts.

Soybeans

Old-crop fundamentals are strong, with Tuesday’s NOPA crush report emphasizing the need to shut down demand while encouraging larger imports to meet our domestic demands. There’s been some doubt of whether the futures market would do the work or leave it to the basis market, but the crush report re-engaged the futures market. The lead May contract pushed above $15 on Tuesday, building on that strength overnight. November pushed to its highest level since July as well, seeking to hang onto its acres as planting conditions improve for corn.

Wheat

Wheat prices removed much of the Ukraine risk premium added on Tuesday amid a drought of fresh headlines today. Showers in the forecast for the Plains added pressure, but the rains are not expected to provide meaningful relief. Today’s losses were large because the Ukraine gains were large on Tuesday. Even so, the reversal doesn’t look good on the charts and leaves us vulnerable to additional liquidation pressure on Thursday if we fail to get additional headlines about threats to the Plains’ crop.

 Beef

Live cattle futures traded both sides of unchanged today, while waiting for greater clarity from the cash market. Early weakness evaporated late-morning when USDA reported good numbers for today’s boxed beef trade; both in volume and value. Some unconfirmed reports of cash trade in the northern Plains feedlot region at $150 per cwt on a live basis and $240 on a dressed basis provided additional support.


Pork

Lean hog futures seem to trade a roller coaster ride as the market tries to grasp reality among conflicting fundamental news. Carcass weights remain near record high levels, roughly 45 above year ago levels, while slaughter numbers are trending lower. Packer margins are near zero, while the cash market is mostly $1 lower today. The May lean hog futures contracted traded mostly inside the previous session’s range, with today’s strength limited by the 20-day moving average at $122.91. The cash market continues to slide lower, but some in the industry believe that those prices will begin to firm now as packers start buying animals for a full slaughter schedule next week after this week’s holiday-shortened schedule.

 Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 4.15.14
2014-04-15T02:26


Corn

Corn prices came under modest weakness early in today’s trade, consolidating just below recent highs. Prices firmed late morning on reports of Russian troops in Eastern Ukraine, with shots being fired. However, neither the May nor December contracts were able to take out chart resistance at recent highs. This leaves the market trading sideways while traders assess the spring weather pattern to determine whether it is bullish or bearish, with the bulls and bears currently at a draw.

Soybeans

Soybean prices firmed early today on reports of strong cash basis that emphasized the tightness of old-crop stocks. Prices took that strength to the next level after the NOPA crush report validated those fears of tight stocks. The lead May contract pushed to $15.0925, settling at $15.0125. The next objective of the market will be to test support at the $15, while seeing if prices can take out the April 9 spike high of $15.12. Tighter stocks also erode the safety net against possible weather problems this summer, supporting new-crop prices.

Wheat

Wheat prices moved modestly higher this morning on concerns that cold weather in the Plains may have damaged the crop. However, prices caught fire when wire service reports reflected escalating violence in eastern Ukraine, with reports of Russian troops on the ground inside of Ukraine. This raises the risk that buyers will be afraid to do business with Ukraine, going elsewhere to get their needs met. Prices hit buy stops above Monday’s highs, accelerating gains. This opens the door for a retest of March highs. The Ukraine factor could quickly disappear, but it’s likely to remain with us for at least the next week or two, if not much longer. However, this type of news can be a very fickle market mover.

 Beef

Live cattle futures consolidated lower today as the trade remains skeptical about new highs. Packer margins are estimated at losses of $121.80 per head, although that’s up from losses of $139.90 the previous day. Product movement is good, with prices showing signs of stabilizing. Even so, bids and asks are not well established, with concerns that we may see the cash market continue to erode.


Pork

Lean hog futures were mixed today, with traders trying to grapple with mixed fundamental and chart signals. Packer margins are estimated at $2.00 per head, down from $2.65 per head the previous day, but better than the $1.65 per head losses seen the previous week. The lead May contract rallied to $123 this morning, before pulling back late in the session. The contract ran into resistance at the 20-day moving average, but it closed a gap left on April 4 before pulling back. Key support that needs to hold is at $114.79.  

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 4.14.14
2014-04-14T01:48


Corn

The lead May corn contract remains well above support at $4.90 and continues to consolidate just below recent highs. Fundamentally, it’s difficult to justify higher prices without a legitimate threat to the 2014 crop. Traders added some risk premium today on strong wheat prices and concerns about Ukraine, but gains were generally modest. December is consolidating largely between $4.98 and %5.07, while waiting to see if planting delay talk actually turns into something they should pay attention to next month.

Soybeans

November soybeans posted modest gains today, but a sustained rally above recent highs of $12.34 would likely need to see active corn planting that would take away from soybean area this year. Planting delays are actually bearish for soybeans, assuming that the acreage would shift to the oilseed later this spring.

Wheat

Today’s resurgent strength was connected a bit more to tonight’s freeze threat in the Plains, where it will be a close call. We’ll know what temperatures do by early tomorrow morning. Mild readings could lead to profit taking. Cold readings won’t prove the scope of damage, with the headlines moving on to other issues. KC July wheat failed to take out the overnight high in today’s trade, leaving a double-top on the charts. Today’s gains were impressive, but those gains could be short-lived if we fail to generate additional headlines on Ukraine and/or freeze damage in the days ahead.  

 Beef

Live cattle futures stabilized today, trading both sides of unchanged. Traders are looking for greater clarity from the cash market. Cash movement emerged late last week at mostly steady to $2 lower, but that was still at a premium to the futures market. Live cattle futures took out Friday’s highs, but gains were restrained awaiting greater clarity. Meanwhile, the feeder cattle futures found good support from both firmer fat cattle futures and strength in the cash market. The latest CME cash index dropped 1-cent to $178.30, but it remains just below record high levels, with some light-weight cattle trading well into the $180s.

Pork


Lean hog futures posted solid gains today, with the exception of the expiring April contract. The latest CME 2-day lean hog index dropped another $1.04 per cwt to $126.75. Traders expect it to close the gap with the April contract ahead of settlement on Wednesday, suggesting they expect the cash index to drop another $2 over the next two days. Today’s cash market is mostly steady to $1 lower, with a few at $2 lower, supporting additional weakness in the index.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.


 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 4.11.14
2014-04-11T02:25


Corn

Corn futures consolidated lower today, with prices trading just below significant highs set earlier this week. Traders were reluctant to push prices higher ahead of the weekend. In fact, it’s difficult to justify prices much above current levels without a legitimate threat to the 2014 crop. Yet, the charts remain supportive, with some outside money continuing to come into the market.

Soybeans


USDA reported this morning that “unknown destinations” bought another 12.1 million new-crop soybeans. The buyer will be assumed to be China. It’s becoming a more aggressive buyer of new-crop soybeans, but that’s not been unusual in recent years. It likes to book a large portion of its needs ahead of the growing season, just in case a weather threat emerges over the summer. Otherwise, follow-through selling was the dominant feature today. A bearish response to a bullish report on Wednesday started the trend, while Chinese defaults added pressure on Thursday. Today’s selling was largely a continuation of the trend.

Wheat

Wheat prices tried to bounce today, but prices eventually gave way to bearish sentiment. The trade is convinced that the next week’s rains will save the Plains crop. Chart signals are bearish, triggering additional selling heading into the weekend. Minneapolis found modest support from planting delays, but Kansas City lost ground to Chicago, which isn’t a good sign for turning things around in the short-term. The next opportunity to stimulate some activity will be following Monday afternoon’s USDA crop progress data, unless Russia decides to go into Ukraine over the weekend.

 Beef

Live cattle futures firmed early today on expectations that late-week cash trade would develop above the lead April contract. Packers were bidding $146 to $147 per cwt on a live basis, while feeders were asking for mostly $150 in the Southern Plains. Last week’s trade developed at mostly $148 per cwt in the region. Sentiment today was that cash trade would develop at steady to weaker money, but that would still be supportive to futures prices.

Pork


The nearby lean hog contracts came under modest pressure today, with the cash markets mostly steady to $1 lower. However, the deferred contracts posted modest gains on expectations that the PED virus would cut deeper into supplies this summer. The latest CME 2-day lean hog index dropped another $0.83 per cwt to $127.79. The index has been down each day this week, with losses totaling $2.56 per cwt. However, it remains at a premium to the April contract trading near $125 this afternoon. The contract expires Monday and settles Wednesday.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.


 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 04.10.14
2014-04-10T03:04


Corn

Traders entered today’s session leaning bearish after a positive USDA crop report failed to sustain gains on Wednesday. Follow-through selling weighed on the market early, but buyers returned when prices held well-above major support at $4.90 for both the May and December contracts. Domestic demand remains solid, with ethanol prices up more than 12 cents today, leading to buying on the breaks yet at this point. That strength pulled prices off their lows, although most nearby contracts ended the session with modest losses.

Soybeans


Three Chinese importers released statements confirming that they are defaulting on roughly 18 million bushels of U.S. and South American soybeans due to their inability to get letters of credit to fund the purchases. They indicated that there are another 5 to 6 cargoes of soybeans on their way to China right now for which they have been unable to get letters of credit. The lead May contract remains well above key chart support at $14.60, although Wednesday’s reversal provides a red flat to the bulls suggesting that at least a near-term high may be behind us. Similar support for November sits at $12, although the new-crop contract currently shows a bit more strength than the old-crop months.

Wheat


Poor export sales and rain in the forecast for the Plains added pressure to technically bearish wheat charts today. New-crop contracts for all three exchanges broke to new lows for the move today, but held above the 40-day moving averages for all three. The bears are in control, with sentiment generally weak in the wheat market. The proof of burden is back on the bulls to justify any sustained move to the upside.

Beef

Live cattle futures were generally mixed to weaker today as traders consolidated prices while waiting for greater clarity from the cash market. The lead April contract continues to consolidate just above $143. The bids and asks in the cash market were generally $2 either side of $148 per cwt on a live basis, which is where trade developed in the Southern Plains last week. Packer margins are estimated at losses of $120.15 per head, down from losses of $111.20 per head on Wednesday.

Pork

April lean hogs consolidated in a relatively narrow trading range today, waiting for the cash market to come down to it ahead of Monday’s expiration, with settlement two days later. The latest CME 2-day lean hog index dropped another $0.57 today to $128.62, leaving it several dollars above the expiring April contract. Cash hogs were generally weaker again today as well.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.


 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 04.09.14
2014-04-09T03:46


Corn

Corn prices spiked initially as high frequency trader computers read the headlines, with the lead May contract trading to $5.19 and December to $5.17. Fundamentally, it’s difficult to justify prices above those levels without a legitimate threat to this year’s corn crop, which traders argue doesn’t exist yet. As such, human traders began selling the initial rally triggered by computers, leading prices to pull back from the initial reaction and showing signs of a top in the market, at least for the near-term. Prices soon slipped into negative territory, adding to concerns, with the greater losses in the new-crop contracts.

Soybeans


USDA increased soybean exports by 50 million to 1.580 billion bushels. It then cut crush by 5 million bushels, cut residual use to zero, increased seed usage by 8 million to account for larger acreage and increased imports by 30 million to a record 65 million bushels. Those changes were unprecedented for USDA, but it still had to cut ending stocks by 10 million to 135 million bushels. That’s just a 14.7-day supply; the tightest of the past half-century.

Wheat


Larger global wheat stocks and skepticism about problems in the U.S. wheat crop combined to pressure prices once again. Chicago July traded within a penny of support at $6.70, while KC July held just above support at $7.35. Sentiment remains bearish, with traders insisting that the bulls prove their case.

 Beef

Live cattle futures firmed today, supported by demand recovery and ideas that we may see steady money in the cash market this week. A recovery in pork prices provided additional support. The futures market was disappointed at the low volume of last week’s cash market at mostly $4 lower, but traders have been reluctant to push the lead April contract below support at $143, even with packer margins at estimated $111 losses per head.

Pork


Lean hog futures are reminding traders of some of the volatile pork belly days. Some contracts traded a $6 range today as prices rode a roller coaster ride of emotions. The lead April contract dropped to $115.125 in follow-through selling, but then rebounded sharply to trade $6 higher to $121.125. Strength came from resurgence in product prices at midday. This market is still trying to get a handle on the PED virus after USDA downplayed the problem on March 28.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

  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 Report04.08.14
2014-04-08T03:09


Corn

Corn futures traded lower in the overnight session, but quickly turned for higher at the open of the pit session this morning. This price action took December corn into new highs for the move, however old crop contracts were held within the recent range. One reason for the strength was a forecast that continues to boast cooler than normal temperatures, and above normal precipitation for much of the Corn Belt.

Soybeans

The soy complex surged higher today as trade sentiment remains that the USDA will raise old crop demand while lowering the carryout. US export pace remains well ahead of pace to reach the USDA’s export goal, and prices could continue higher even if final crush comes in lower and more South American imports are required to maintain our domestic need. In a bullish reversal the May/July soybean spread rallied from support at +16 to +21 back into the mid-range of trade. November soybeans once again pressed their nearby highs before closing at 12.15.

Wheat

Even though the USDA delayed its crop progress report yesterday, the Plains states did release their reports yesterday showing continued deterioration in the central and southern plains. The USDA is expected to release its crop conditions report at 3:00 this afternoon but there has been some rumors of it being delayed again.  Weather continues to be the focus around the markets. Rain potential looks light over the Plains until the end of the week. Eastern areas could get good rainfall totals. Expectations for coverage through mid-April are around 70% of the area.

Beef

Live cattle had some strength today as boxed beef came in higher at midday with choice up .69 at 228.62, and select up 1.68 at 217.67.  Volume at midday was light with only 79 loads.  A late grilling season is impacting the light movement lately.  Cash bids came in the South today at $146.00 from packers, this is $1.00 lower than last week’s opening bids.  The lighter opening bids signal packers are still being cautious as their margins continue to go lower.  Asking prices are still in the $150.00 range. 

Pork

Hog finished under pressure today as growing concerns remain for demand along with bearish chart signals.  Longs are continuing to take profit as cash hog prices have continued to weaken.  The CME index closed at 129.69 on 4/4 and trade will remain volatile for this week as April futures go off the board early next week.  Traders are focused on rolling positions with spread trade taking precedence.  Cash was weaker today keeping pressure on the market. 

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  All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

 

 

 

 
Water Street Solutions Daily Report 04.07.14
2014-04-07T03:45


Corn

Corn futures pushed lower in profit taking today as money flowed out of the broader commodity at large due to nervousness in the equity markets following Friday’s sharp break. Fund managers were also reluctant to push prices to new highs ahead of Wednesday’s USDA crop report, leaving prices trading lower toward the bottom of their recent range.

Soybeans

Soybean prices followed a similar path to corn today, except that they did not firm as much as corn in the final couple of hours, at least for the nearby old-crop months. Export business is slowly shifting south of the equator, with the first cargo of South American soybeans reaching the Gulf over the weekend.

Wheat


Wheat prices posted a modest bounce today, going against the tide of selling for much of the session. Much of the strength was technical in nature, with prices bouncing off chart support late last week after plummeting the past couple of weeks. The Plains crop remains quite dry for more than half of the crop, but traders point to bearish charts to suggest that the high may be behind us. They need to see proof that the problems in the Plains are as bad as farmers hype.

Beef

Live cattle futures gave way to follow-through selling early in the session, but firmed mid-morning as boxed beef data showed stabilizing prices. The lead April contract remained the weakest late in the day, with the greatest strength in the deferred contracts. Even so, the futures market looks very technically weak, suggesting that it is vulnerable to additional weakness.

Pork


Lean hog futures saw follow-through selling early today, but bargain hunters firmed the market late in the session. The lead April contract pushed $1.50 higher trying to catch the cash market, while the May contract ended the day mostly unchanged. Yet, some of the deferred contracts saw good strength as traders fretted again about the possibility that the PED virus has caused more damage than was reported by USDA in its quarterly hogs and pigs report. Even so, the charts remain vulnerable to returning weakness from a technical standpoint.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 04.04.14
2014-04-04T01:55


Corn

Fundamentally, it’s difficult to justify a sustain rally much above current levels, but corn prices firmed into the close after the equity markets showed signs of topping action. We’ll have to see what the follow-through is next week, but there’s a chance we could see a reversal of money flow out of the equities into the commodities if we do indeed see the equities break lower in the weeks ahead.

Soybeans

The strength of today’s market was in the deferred new-crop contracts on spread trading. That’s indicative of a market wanting to “buy” acres, which could be a concern if April suddenly warms up, allowing corn acres to go in the ground as some forecasters are now talking about. The May soybean contract remains strong above $14.60, with near-term resistance at $15. November closed the week above $12, posting its highest close since the end of the 2013 summer. The charts remain healthy, suggesting that the futures market may be willing to do the work this year of financing imports, after it allowed the cash market to do the work a year ago.

Wheat

Traders continue to remove risk premium from the wheat market, based on bearish chart signals. Fundamentally, they’re using recent showers in the Plains wheat belt to justify the selling, even though those showers were very light in the driest areas of the belt, with 50% or more of the belt very dry as we move into the critical reproductive phase of production. Irreversible damage is being done, with the scope of damage increasing dramatically if dry conditions continue the next two weeks.

Beef

Cheap” pork prices weighed on the live cattle market today, with traders worried that cheaper pork will steal market share from high-priced beef. Traders ignored a triple-top on the April charts at the end of March at $147, choosing instead to drop back to test the bottom of the past month’s trading range near $143. That put the lead contract at a sharp discount to the cash market, last reported to be at $152 per cwt on a live basis in the Southern Plains and $154 in Nebraska.

Pork

Lean hog futures again came under pressure today on ideas that at least a near-term high may be behind us. The lead April contract traded at more than a $7 discount to the cash market, with the contract’s expiration rapidly approaching on April 14. This could lead to some fireworks if the cash market fails to drop sharply in the days ahead.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 04.03.14
2014-04-03T02:32


Corn

Several factors supported money flow into the broader commodity sector today, most of which came from China’s announcement of additional stimulus for its economy. Both the May and December traded back above $5, although May settled fractionally below it. Even so, positive charts overall continue to support money into the corn market, as traders focus on strong demand rather than an expected big harvest.

Soybeans

The key to the soybean market today was the inability to find selling interest below $14.60 per bushel for the lead May contract, with prices settling above it at $14.7525. That’s the benchmark for me at this point, with overhead resistance at $15. The market is trying to slow crush activity, while encouraging imports of soybeans and soymeal. The combination should continue to support soyoil prices as well.

Wheat

Wheat experienced a technical bounce today, amid increased money flow into the broader commodity sector and strength in the corn and soybean pits. However, sentiment remains bearish overall in the wheat market. Traders have bought into weather scares in the past and been burned by wheat, so they’re reluctant to buy into the current Plains problems until they see harder evidence of significant problems later this spring. Long-term, Kansas City needs to be the leader and it lagged the other markets today.

 Beef

Live cattle futures firmed today on stabilizing product markets and unconfirmed trade rumors that cash cattle traded late yesterday at $152 per cwt on a live basis in the Southern Plains, which would be steady with the previous week and at a premium to the futures market. Additional support came from solid numbers in USDA’s weekly export sales report this morning. Exporters sold 13,800 tonnes of beef during the week, up from 13,300 tonnes the previous week. They shipped 12,200 tonnes, up from 11,600 tonnes the previous week.

Pork


Lean hog futures dropped sharply today on ideas that this year’s rally may be coming to an end, at least for now. The cash market was mostly steady once again today, rather than the steady stream of higher prices we’ve seen over the past 10 weeks. Furthermore, the product market is beginning to look top-heavy as well. The May contract dropped the $3 daily trading limit, sitting there for much of today’s trading session. The April contract must saw smaller losses, as it needs to converge with the cash market by expiration on the 14th.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 04.02.14
2014-04-02T02:49


Corn

Both the lead May and new-crop December contracts ended the day back below $5; a psychologically significant price level. However, both still have some support at the $4.90 area. Selling would be expected to accelerated if that level gives way. The Department of Energy reports that ethanol stocks increased to 15.9 million barrels in the week ending March 28, up from 15.7 million the previous week, but down from 17.5 million the previous year. Prices at eight-year highs stimulated production to rise to 922,000 barrels per day during the week, up from 885,000 the previous week and up from 807,000 the previous year.

Soybeans

Profit taking returned to the soybean pit today after the lead May contract failed to test resistance at $15. The lead contract rallied to $14.96 before pulling back. It rallied again for another attempt, but couldn’t even retest the $14.96 level. That increased the selling pressure with traders thinking that the high may be in place. Similarly, the lead soymeal contract failed to test resistance at $486.50.

Wheat

Unfortunately, the wheat charts show indications that the top may be behind us, leading to massive selling following this winter’s strong gains. Support gave way at $7.50 for the key Kansas City July contract, adding to the losses. Conditions continue to deteriorate in the Plains, even as traders point toward potential relief over the next week. USDA is scheduled to issue its first national ratings for the winter wheat crop on Monday.

 Beef

Live cattle futures found support from stabilizing product prices and the fact that this week’s liquidation held key chart support. Packers are losing an estimated $90 per head, leading them to lean heavily on formula cattle. We should get a better handle later this week on whether formula cattle were able to meet packer needs when the cash market develops in the Plains feedlot region.

Pork


Lean hog futures continued to ride a roller coaster today. Friday’s USDA quarterly hogs and pigs report was bearish. Monday’s break was bought by the industry, arguing that USDA was out of touch. That rally led to new contract highs for the lead April contract. However, Tuesday’s gains were sold today by traders worried that USDA might be correct amid signs that the cash market may be showing signs of topping. That led to widespread selling of the futures market, with some of the deferred contracts trading the $3 daily limit lower.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 04.01.14
2014-04-01T04:03


Corn

Fundamentally, the follow-through rally that built on old-crop prices above $5 and pulled December above $5 as well is buying some corn acres back. That doesn’t mean that the rally is over, but it does say that the market will be vulnerable to a sharp break if and when fund managers reverse money flow for whatever reason. As such, monitor money flow into the commodities for signs of change.
Soybeans

The lead May soybean contract turned heads in the investment world when it moved to new contract highs above $14.60. The triple-top gave way on the charts, as they frequently do, attracting follow-through buying that propelled prices higher. The May soybean contract traded to its highest level for a lead soybean contract since September. Fundamentally, the market had good support from both the soymeal and soyoil markets. Soyoil continues to see an improving demand picture, with palm oil production in doubt due to adverse weather in Southeast Asia. Additional support came from reports that the Senate Finance Committee will markup a bill on Thursday that would extend many important tax credits.  

Wheat

USDA is scheduled to begin weekly crop ratings next week, but for now we have to look to key states that have already begun to release ratings. Crop ratings continued to decline in Kansas, Oklahoma and Texas, according to the latest data released late Monday, even as drought and high winds again produced blowing dust that closed highways in western Kansas and Nebraska, due to poor visibility.

Beef

Live cattle futures broke lower today, following through on weakness from Monday. Unlike Monday, the market failed to rally significantly off session lows today. However, the lead April contract held above first key support at $144. The April chart still has a triple-top at $147. Triple tops frequently yield to even higher prices, but traders need to see greater evidence that the cash market is going to continue higher before they are comfortable taking futures prices higher.

Pork

USDA issued a bearish quarterly hogs and pigs report on Friday afternoon. Lean hog futures broke sharply lower Monday morning in reaction to the report, but that break was bought, with the lead April contract posting nice gains to close out the day. Follow-through gains were seen today across the board, with the lead April contract settling near its session high and at new record highs for a lead contract.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 3.31.14
2014-03-31T03:05


Corn

USDA’s report took the wind out of the bear’s sail, allowing traders to focus on strong demand amid smaller acreage. Additional support came from another surge in ethanol prices to eight-year highs, with the lead contract up more than 24 cents on the day as rail logistics problems continue to leave blenders short. The lead May corn contract consolidated just below $5 after the report, finally pushing above it just ahead of the close. That level will likely be test in tomorrow’s session. December corn settled just below $5.

Soybeans

USDA reports that farmers intend to plant 81.493 million acres of soybeans this year, up from 76.5 million the previous year, up from the average trade estimate of 81.075 million, but down from our estimate of 82.3 million acres. However, soybean acres have the most potential for rising from this point, considering the large number of acres still not accounted for and/or planting delays that might discourage corn or spring wheat planting. The lead May soybean contract traded more than a 43-cent range today, finishing near its session high and settling above resistance at $14.60. November soybeans came in on the short-end of spreads, but still firmed to settle relatively near session highs.  

Wheat

USDA pegged all-wheat acres at 55.815 million, down from 56.156 million in 2013. The estimate was also below the average trade guess of 56.277 million, while very close to Water Street’s estimate of 55.9 million. Durum gained 329,000 acres, while Other Spring wheat gained 413,000 acres. New-crop wheat futures traded roughly a 20-cent spread in the immediate minutes surrounding the USDA data release as computers analyzed the headlines. However, prices firmed off their lows to settle relatively close to session highs. Key chart support held, setting us up to trade this afternoon’s crop ratings from states in the central and southern Plains. Blowing dust in the High Plains had visibilities near zero once again today, underlying the severity of the drought.  

Beef

Live cattle futures pulled back today, waiting for clearer direction from the cash market, with an eye to the hog market’s reaction to a bearish USDA quarterly hogs and pigs report. The lead April contract broke lower to start the day, following its inability to break above key resistance at $147 on Friday. However, the contract firmed to settle again just below its session high of $146, suggesting that the market remains well-supported.

Pork

This year’s carcass weights are up nearly enough to offset the 3.3% drop in pig numbers that were in Friday’s USDA report. That should justify very sharp losses, considering the levels at which we are currently trading combined with the amount of pork currently in the freezer. However, packers have a pretty good feel for the actual impact of the PED virus, because it is the arena in which they operate every day. As such, we can learn something by watching the behavior of the market in the days following Friday’s bearish report. Several contracts traded the $3 daily limit lower early today, but the break was bought, with the lead April contract eventually moving firmly into positive territory.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

  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 3.28.14
2014-03-28T02:05


Corn

Corn enjoyed a sedate trading range today, with the majority of the session spent between one and two cents higher for both old and new crop corn until a last minute slip to a loss of two cents. As expected traders are not eager to push the market with the amount of uncertainty surrounding Monday’s USDA quarterly stocks and planting intentions report. Funds are now nearly 200,000 contracts long corn and in major adjustment to their position will only magnify the market direction established by Monday’s report. Four out of the last seven March 1 stocks reports have produced limit moves in corn, and in recent years bullish December 1 reports have often led to bearish March 1 reports.

Soybeans

Soybeans were mixed today as traders established old crop / new crop spreads in anticipation of a friendly stocks number and bearish acreage number on Monday’s report. The soybean market remains in an uptrend and the pattern of trading has been supportive action during the early hours of the session, followed by mid-session selling pressure. The market may need more bullish news from the USDA to see a resumption of the uptrend as the market seems to be overbought going into Monday.  

Wheat

Further hints that there could be a shift to better weather in the western and southern plains in the extended forecast models and less fear of production losses in Ukraine this year helped to pressure wheat through the overnight and daily sessions. With Ukraine slipping from daily attention, the wheat market is increasing focus on the prospects of moisture relief for the western and southern plains. More rainfall will pressure the market lower, but if the forecast models turn off drier than expect the market to continue to push higher into the resistance area established at 7.25 on July Wheat.

Beef
Live and feeder cattle futures were buoyed yesterday on strong markets for cattle and wholesale beef supplies. USDA data showed that packers paid about $152.28/cwt for live steers and $152.03/cwt for live heifers on Wednesday while dressed values were pegged at $243.55/cwt and $241.74/cwt, respectively. Fed cattle prices were expected to drift lower in late March and April on improving weather conditions and seasonally higher supplies of market ready cattle. So far, however, feedlot supplies remain current and cold weather continues to impact availability.

Pork

The hog market has traded both sides today in anticipation of this afternoon’s Quarterly Hogs and Pigs report, which should indicate the effect that PED is currently having on pork production. Many professional traders have criticized early estimates for the report as too conservative given field reports of the effect that PED is having on summer and fall production. Estimates are currently at a 5.5% decrease from last year and a 6% decrease in kept for marketing numbers.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.
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 3.27.14
2014-03-27T02:47


Corn

Strong export demand lifted corn futures today, but gains ran into a road-block near the top of their recent trading range. The lead May contract spent much of the past month trading primarily between $4.75 and $4.90, while December trades primarily between $4.80 and $4.90, with both periodically spiking outside of that range. The May contract did so today, settling at $4.92, while December is poised just below the top of the range at $4.88.

Soybeans

Traders have been leaning hard to the long (bought) side of the soybean market on expectations that USDA will confirm extremely tight stocks on Monday. USDA currently pegs this year’s ending stocks at 145 million bushels, which is just a 16-day supply, the tightest of the modern era. Historically, the cash market simply doesn’t allow supplies to be drawn that tight.  

Wheat

Wednesday’s showers in the Southern Plains generally brought 0.10 to 0.50” to 25% of the wheat belt, but current winds in the region have pulled much of that moisture from fields already. As a result, wheat traders were rebuilding risk premium into the market today, after having corrected over-bought conditions on Wednesday. Traders are also keeping their eye on very dry conditions over one-third of China’s wheat belt, as well as two-thirds of Ukraine’s belt, while conditions remain dry in Australia and the Middle East as well.

Beef

This week’s strong cash market provided support for the futures market today, with traders trying to catch up to the cash market. Product prices are trading sideways just below recent record high levels, but traders note that at least they’re not crashing lower as they did in January. Even so, today’s packer margins dropped to an estimated loss of $4.85 per head, down from small profits of $0.75 the previous day and down from profits of $24.15 per head the previous week.


Pork

Lean hog futures surged higher today, at times trading the $3 daily limit higher, as the focus shifted back to the strength of the cash market amid tightening supplies of market-ready hogs. The PED virus is expected to have its greatest impact on market hog supplies this summer and fall, but it is already pushing packers to battle for existing supplies to maintain their market share and to store enough pork in the freezer ahead of the tighter supplies.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

 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 3.26.14
2014-03-26T02:45


Corn

Corn futures consolidated lower today, after testing the top of their recent trading range on Tuesday. Traders prefer to keep things within their recent trading range until they see Monday’s USDA quarterly grain stocks and planting intentions reports. That keeps the lead May corn contract range-bound between primarily $4.75 and $4.90 and December between $4.80 and $4.90.

Soybeans

Soybean futures continued to push higher today, in follow-through to Tuesday’s strength. Traders expect USDA to confirm very tight stocks on Monday, necessitating additional demand rationing and increased acreage to rebuild supplies. One could argue that an expected upturn in Brazilian rains will also provide support, but the primary focus of traders at this point remains on Monday’s data from USDA.

Wheat

Kansas City July wheat is consolidating in its recent range, primarily between $7.65 and $7.92. This contract continues to be the indicator for me of the longer-term health of this year’s rally. We may see a bump in crop ratings Monday for Oklahoma following today’s rains, but the belt as a whole will likely continue to see poor conditions overall, with no significant change in the dynamics. It’s still early enough that we could see a significant improvement in market fundamentals if the weather pattern would turn wetter, but such a shift is still not showing up in the two-week outlook.  

 Beef

The lead April live cattle contract moved cautiously higher today, supported by stronger cash, but wary of testing contract highs ahead of key USDA reports bookending this weekend. The contract continues to trade a range between $143 and $147, with the cash market providing an upward push for the market. Feeder cattle futures found strength in the fat cattle market, with additional strength coming from higher cash prices for light weight calves that are a product of profitable margins in the feedyards. The latest CME cash index came in at a record $177.02 per cwt today, up $0.36 on the day.

Pork

Lean hog futures traders continue to be haunted by fears that USDA will reveal a much-different view of the PED virus than the picture painted by the industry when the agency releases its quarterly hogs and pigs report on Friday afternoon. This led to heavy profit taking that early in the week, with futures contracts down the $3 daily limit on Tuesday. Prices started today lower as well, but the discount of the lead April contract to the cash market led to bargain hunters buying the break once again.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 3.25.14
2014-03-25T02:14


Corn

Corn prices pulled back from big gains on Monday that challenged the top of their recent trading range. Traders are reluctant to push prices to new highs, despite Ukrainian tensions, before seeing USDA’s quarterly grain stocks and planting intentions report. Those reports are known for their surprises; and the surprises often defy logic, especially for the stocks data.

Soybeans

Soybean prices continued to push higher for much of today’s session on expectations that USDA will confirm extremely tight stocks on Monday as crush and export demand remains above levels needed to reach USDA’s targets. However, traders are still being cautious, with more price swings possible ahead of Monday’s reports. Traders know USDA’s propensity for surprises in these reports.

Wheat


Key wheat states in the central and southern Plains released updated crop ratings late Monday afternoon. Kansas, Oklahoma and Texas report that the portion of the winter wheat crop that is rated Good to Excellent is 33, 17 and 11% respectively, down from 34, 18 and 13% the previous week. Oklahoma reports that 29% of its crop is jointing, down from 40% the previous year and down from the five-year average for the week of 48%.   

 Beef

Live cattle futures dropped late morning when boxed beef prices came in weaker than expected. Movement by mid-morning was just 60 loads. Choice cuts were down $0.39, while Select cuts were down $1.10 per cwt. Cash trade began emerging in the Southern Plains feedlot region earlier than expected this week, with a few thousand head moving in Kansas and Texas at $150 per cwt on a live basis, which is mostly unchanged from the previous week, but at a $5 to $6 premium to the lead contract.

Pork


Today’s sell-off leaves the lead April contract vulnerable to testing support at $112, although it is already trading below the cash market, with expiration less than three weeks away. The latest CME 2-day lean hog index increased another $2.20 per cwt, marking the 44th straight trading day with a higher index. The index is up $42.66 per cwt or 53% over that period of time.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 3.21.14
2014-03-21T02:41


Corn

Corn futures followed the other commodities lower overnight, but found support from export news this morning. Prices remained under pressure for most of the day from general weakness in the Ag sector, but selling was quite limited after USDA reported that Egypt bought 13.4 million bushels of U.S. old-crop corn overnight.

Soybeans

Liquidation continued today in the soybean market following a bearish double-top posted on both the May soybean and May soymeal contracts on Thursday. Added pressure from the outside markets simply added to the selling. Fundamentally, the weakness allowed traders to focus on some private estimates calling for USDA to increase soybean acreage by 7 million on March 31, as well as ongoing trade talk about China cancelling South American purchases.

Wheat


Wheat futures broke lower with the rest of the markets over the past couple of sessions, with traders taking profits after making major moves this winter. In fact, the Kansas City July wheat contract turned higher when crop ratings took a sharp turn downward in January. That propelled the contract nearly $2 higher from its late January low, with little in the way of corrections over that period.   

 Beef

The lead April live cattle futures contract posted a bearish reversal on the chart Thursday; rallying to a new contract high before breaking sharply lower. Follow-through selling weighed on the market until late morning, with traders also positioning for this afternoon’s USDA cattle-on-feed and cold storage reports.


Pork

April lean hog futures continued to find support from the cash market today, although the contract was unable to test the previous day’s high. Trade nerves are thin at these high altitudes, particularly with a volatile USDA quarterly hogs and pigs report just a week away. That report could reveal that the industry is either in much worse or much better shape than currently perceived due to the PED virus.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 03.20.14
2014-03-20T02:06


Corn

Traders focused on record global production expected for the 2014-15 marketing year this morning, based on a report issued by Ag Resource. Surging soybean prices provided underlying support early in the day, but that support gave way when soybeans broke from their highs. Both the May and December contracts remained within their recent trading ranges, but the December contract turned back when it failed to take out the 200-day moving average at $4.87625.

Soybeans

Soybeans pushed higher against a tide of fund selling in the commodity sector, fueled by tight supplies of soybeans and soymeal. However, strength in both those markets collapsed after their lead May contracts failed to challenge late winter highs on the charts. That left double-tops on the charts. Both the May soybean and soymeal contracts managed to post modest gains at the end of the day, with underlying support holding on the charts. The November soybean contract briefly probed above its March 7 high before breaking lower, but major support held there as well.

Wheat

Wheat prices were over-bought and due for a correction following recent gains, leaving them vulnerable today when the funds began selling the broader commodity sector. New-crop contracts rallied to new highs for the move before collapsing lower, but then firmed again to settle near the middle of today’s trading session. The lead Chicago May found active buying on a dip below the psychological $7 level.  

 Beef

The April live cattle futures contract rallied to $146.925 this morning, taking out the previous high of $146.825 set in early March. Prices collapsed as USDA released product data showing lower prices this morning, tried to rally again on higher cash prices, but collapsed once again as traders took profits. Anxiety is high ahead of tomorrow’s USDA cattle-on-feed report, with added pressure coming from a sell-off in the broader commodity sector.

Pork


Lean hog futures moved in different directions today. The lead April contract continued to find support from the cash market, while profit taking pulled prices lower in the deferred contracts after reaching record high levels earlier this week. Packer margins are estimated at $8.85 per head, down from $17.20 per head the previous day, but still strong enough to pay higher prices on the cash market, which was reported to be mostly $1 to $2 higher once again today.

Sign up for MarketSense Weekly, a free weekly e-newsletter written by Arlan Suderman, at www.waterstreet.org.

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 03.19.14
2014-03-19T02:51


Corn

Corn was a follower again, firming amid strength in the soybean and wheat pits, with additional support coming from a 14-cent gain in ethanol prices today. Corn prices largely remain range-bound just below significant chart resistance. Strength in the soybean and wheat pits may be able to pull prices above that range in the days ahead, while the opposite is true as well. However, many traders would prefer to see the results of USDA’s March 31 quarterly grain stocks as well as planting intentions reports before committing to a move outside the range.

Soybeans

The soybean rally continued overnight, holding double-digit gains into today’s trading session as well. Positive chart signals encouraged buying, but there is fundamental support as well. China failed to make the massive cancellations of previous purchases of U.S. soybeans as the trade expected and continues to take shipments. It’s doing so amid a tightening old-crop stocks. As such, soybean fundamentals are expected to remains strong until/unless the trade sees signs of large imports of South American supplies; not just a cargo here or there.

Wheat


Wheat futures surged higher today, led by Kansas City on concerns about the health of the Plains winter wheat crop. Ratings continue to slide in Kansas, Oklahoma and Texas, with little rain in the forecast for western areas of the belt. Kansas City July futures rallied to a nine-month high today in an over-bought market that is due for a correction.

 Beef

Live cattle futures gave way to profit taking early in today’s session, but firmed on reports of record high prices for Select cuts this morning, with impressive movement as well. This allowed the lead April contract to trade near its session high into the close, with prices at their highest level since March 5thand today’s close the highest on record for a lead contract. The contract is just below its record high of $146.825, but traders would prefer to see clearer direction from the cash market before making their next move.

Pork


Lean hog futures broke lower early today on profit taking, on ideas that the market was finally putting in a top. However, like previous breaks, this one was bought as well as the cash market continues to push higher. Packer margins are estimated at $17.20 per head, allowing them to pull hogs into the market. As such, today’s cash trade was mostly $1 to $2 higher in the Midwest.

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All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.