WASDE

Grains were in the spotlight today after the release of this months WASDE report.

Most of the action was in new crop as it appears estimates are looking like there will be a huge crop in both grains and oilseeds.

All estimates came in above expectation for the new crop, while for old crop the results were somewhat inline with expectations.

Interestingly the weather problems we've seen in wheat haven't seemed to have taken too much of a toll in the latest set of numbers and similarly in corn, the planting delays don't appear to be a factor as yet.

USDA Livestock

Trading Update

There's only been a little bit of action on the trading front for me this week as it seems this is a reasonably quiet period for spreads. I do however have a couple of trades I like and a few on the watchlist.

Natural Gas

We've finally started seeing the weather become more mild across much of the US and as a result the builds in storage are starting to increase. Yesterday we saw a build of 88 BCF which was somewhat inline with expectations and the result was a relatively muted move in the front month contract as well as our previous spread.

This makes me think that the shoulder season has been factored in and as a result it might be a good time to get out of our old spread in which the seasonal window ends on May 17th.

The Oct-Dec spread above does still look decent and there is some potential to move into this one should we get a bit of a pullback.

 Live Cattle/ Lean Hogs

I've been trying to get this one at 29 and it finally traded at our price over the last few days.

The talk around is that the buying in hogs in the lead up to memorial day (second largest day for grilling behind Independence Day) is coming to an end and as a result hog prices could potentially come off and we might get a quick bounce.

Crude Oil

This one was somewhat technical in that Crude continued to bounce off the 1.60-1.80 level. We were able to work a good price on this one after Wednesday's smaller than expected inventory build.

Yesterday some dollar strength and equity weakness helped it bounce off the support level once again.

Live Cattle

This one is just on the watchlist for now and I'm still trying to work a good price. I like 1.0 as we've seen a continued bounce off that level. It's been moving sideways somewhat over the last week but I'll keep an eye on it.

WASDE

Today is another interesting day for the grains with the monthly WASDE report being released.

I haven't been trading any of the grains in the last few weeks as weather has been one of the driving factors, so it will be interesting to see if that plays any role in this report.

Corn is seemingly the one that could benefit from the colder and wetter season that we've been seeing to date. Planting delays are likely to reduce corn yields and that could be potentially factored into new crop ending stocks for corn.

For Soybeans, I think all eyes will be on ending stocks for the current year. The cash basis has been quite strong recently with a significant premium to the futures, with farmers and crush plants reporting it being tough to source the physical oilseed. This might play a part in the current year ending stocks.

Watchlist

Today I'm watching another somewhat technical spot in Crude Oil. Oil has been quite volatile over the last few weeks on the back of a massive sell off, followed by a subsequent rally.

Then to top things off, Friday's better than expected jobs number added some more fuel to the recent strength followed up by some middle east tension over the weekend.

This bear spread in Crude has been bouncing off the 1.70 mark both this year and seasonally.

Looking at the weekly chart we can see that it hasn't stayed at these levels for very long periods of time.

That said I would like to see some signs of a reversal before entering this one. Six of the last eight sessions have been strong in this spread and I would like to see something change before entering or at the very least work a very good price.

Watchlist

Here's an inter-market spread between Live Cattle and Lean Hogs.

This spread seems to be bouncing off the 29.0 support level both this year and seasonally. Our window is open until the 27th May and looks like there might be a chance for a late bounce.

I recently mentioned that I was bullish on hogs and there has been a jump in corn prices recently on the back of planting delays. Regardless this looks to be good on a technical level.

Natural Gas

Our natural gas bear spread has been somewhat well behaved this week as we go into today's storage number.

In the front month, natural gas has been continuing to test 4.40 but as of yet hasn't been able to hold above that level. Fundamentally inventories remain lower than last year with slight builds of 30 and 31 BCF over the last two weeks. This weeks consensus is for another build around the 28 BCF mark.

The weather outlook for much of the US is for mild conditions without much demand for heating.

We'll be watching tonight's storage number closely and continuing to monitor the spread.

The current seasonal window runs until May 17.