1. Art and Diseño

Morning Commentary
February 5, 2015
CORN: STEADY
We watched the grain complex give away some of the
gains from the rally on Tuesday. March corn traded in a
ten-cent range closing at down two cents at $3.83 ½. As
expected, March gravitated toward the 100-day moving
average of $3.78. Funds continued to liquidate longs, now
net long 153K contracts. With not a whole lot of market
moving news on the horizon, we are intently watching
outside market movements. The USD continues to be a
market mover for the entire commodity index. Crude
retreated yesterday after a friendly stocks report. Ethanol
production numbers were down 30K barrels per day and we
expect production to continue that trend as producers are
starting to feel the fallout from record low crude prices.
Export sales came in at the lower end of the estimate at
845K MT vs. expected 800-1000. Milo continues to
impress with another 223K MT net sales. Milo has now
exceeded USDA annual sales estimate with 28 weeks left
in the marketing year. With decent sales numbers and the
dollar down a bit this morning expect tight trade. Support
for March corn at $3.68 and resistance at $3.88 ½ and then
$3.95.
As of the break, CH15 was 1 ¾ higher.
SOYBEANS: BETTER
Export sales are out and the complex has little to be excited
about. Though meal and beans were at the top end of the
range, the top end of the range was not a tough number to
reach. Looking elsewhere, there is not much to get excited
about. Status quo pretty much reigns supreme. With the
USD only marginally lower, I would not expect much of a
bounce from that today. The volumes were all off yesterday
across the complex, but damage was most severe in meal
OI where over 7K came off the board. Basis is firm if not a
tad stronger. Spreads are still range-bound. Tomorrow is
the first day of GS roll. Look for better trade early, but both
sides to trade following the USD path. Beans: V203,435/OI-704,614(-3,660) Meal: V-80,967/OI-363,430(7,575) Oil: V-96,644/OI-408,307(+1,142)
As of the break, SH15 was 5 ¼ higher.
WHEAT: HIGHER
The wheat market continues to follow outside market
factors, as KC is up 5 ½ this morning due to the USD and
crude giving support. Weekly export sales came in at the
middle of the estimate range with 397K MT sold for
2014/15. U.S. also made sales of 89K MT for 2015/16
marketing year. Taiwan purchased 86K MT of U.S. milling
wheat in a tender this morning for Mar-Apr. shipment;
varieties included DNS, HRW, and SWW. The UN FAO’s
world food price index fell 3.6 points in January to 182.7
points, and its world cereal production for 2014 is pegged
at a record high. Look for higher trade today on outside
markets; USD down 170 points and Crude Oil up 137
points. The CME Group announced yesterday that most
open outcry (pit) trading will close July 2, 2015, after
volume of pit trade is down to 1% of total daily futures
volume.
As of the break, KWH15 was 5 ½ higher.
CATTLE: MIXED
Following a sharp rally across the commodity complex on
Tuesday, most markets gave back a majority of those gains
yesterday and the cattle market appeared more than happy
to participate. But despite the $1.92 loss yesterday, the
most-active Apr. live cattle contract still has not taken out
the low set on January 26. Since then Apr. futures have
traded in a general $148-152 range and aided bulls with
mild relief… On the cash front, we did see packers move
bids to $160 in the South yesterday and buy a small
quantity of cattle that way. This would be fully steady, or
even $1 higher than last week’s market, with most sellers
now moving their asking prices to $161-162. This cash
strength lent some support to nearby Feb. futures with the
Feb/Apr. spread trading all the way out to $4.35 yesterday
and fresh contract highs. Look for a mixed start this
morning with mostly firmer outside markets. Any
developing $161-162 cash trade should help support
futures.
Fund Position
Accumulative
Yesterday
Corn
+153,415
-6,000
Soybeans
-11,787
-9,000
Soybean Meal
+34,953
-3,000
Soybean Oil
+16,048
-1,000
Chicago Wheat
-22,819
-2,000
KC Wheat
+12,184
N/A
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