Stewart-Peterson Market Commentary

Closing Commentary - April 17, 2019

Top Farmer Closing Commentary 4-17-19

CORN HIGHLIGHTS: Corn futures saw mild losses today as contracts finished 1/2 to 1 cent lower in today's trading session. Front month May corn was down 3/4 o to 3.58-1/4, while new crop Dec corn was down 3/4 to 3.86-3/4. ?Corn futures saw some additional follow through selling after yesterday's weak close as prices are pushing to the lowest level since the April USDA Supply and Demand report. Corn futures saw follow through selling pressure from the soybean market as it pushed to nearby lows as the overall fundamental picture in the corn market remains bearish with increasing supplies and demand concerns. Tomorrow's weekly export sales will be closely watch as estimates are 500,000 to 850,000 mt of corn sales last week, which has seen a slowing pace in the most recent weeks. If this strength continues, U.S. stockpiles could see some additional growth as adjustments are made to overall demand projections. With the overall market showing bearish fundamentals and short term concerns regarding demand, managed money is easily holding defending their record large short position, estimated near 280,000 short contracts.

SOYBEAN HIGHLIGHTS: Soybean futures were under pressure throughout the session, finishing with losses of 8-3/4 to 10-3/4 cents. Both the May and Jul contracts closed down 10-3/4 with May finishing the day at 8.88, a decisive close under the 9.00 mark for the first time since the end of March. New crop Nov closed 10 lower at 9.21, its lowest close since March 29. The overall trend for soybean prices remains sideways to lower. The sideways trend comes into play with prices holding the low from early November and staying beneath the high from late November. The more immediate or near term trend shows a high on February 1 and a series of lower highs and lower lows with the 21 and 40-day moving average acting as overhead resistance. Today's slide likely uncovered sell stop orders, but without positive news, we're concerned additional downside may be possible. Harvest continues to roll along in Argentina. Supporting prices is the general conception that acreage will be down 3 million or more and that after a substantial yield last year, as well as the previous year, the bean crop may struggle to keep up with high end expectations. While those concerns could be true, the reality is that carryout is more than double from a year ago and that the trend is working lower.

WHEAT HIGHLIGHTS: Wheat futures saw a bit of a corrective bounce after yesterday's aggressive sell-off as contracts finished firmer. The Chi May wheat contract was 2 cents higher to 4.47, while the Jul contract was 1-3/4 higher to 4.50-1/4. Hard red KC contract in May was 3-1/2 cents higher to 4.20-3/4, while Mpls spring wheat saw mild gains with the May contract up 1/4 to 5.27-1/2. As prices pushed through key technical support levels, wheat markets looked for a bit of a corrective bounce in today's trade. With the Chi Jul contract challenging back above the key psychological 4.50 area, the short term technical trend looks lower being supported by bearish fundamentals. Earlier this week, SovEcon raised their Russian wheat forecast approximately 12 mmt above last year adding to a burdumsome global supply, and U.S. wheat conditions remain in overall good shape, which is help keeping overall pressure on wheat markets. In addition, U.S. demand is lacking overall, but tomorrow's export sales numbers will be closely watched to see if there is any improvement as the market is anticipating 200,000 to 400,000 mt of old crop and 150,000 to 300,000 mt of new crop wheat sales for last week.

CATTLE HIGHLIGHTS: Cattle markets closed mixed to mostly lower this morning in quiet and choppy trade help back by the hog markets. Apr lives closed 22 cents lower to 126.92, Jun lives closed 7 cents lower to 122.37, and Aug lives closed 22 cents higher to 119.55. Apr feeders were down 35 cents to 145.32, May feeders were down 60 cents to 150.60, and Aug feeders were up 25 cents to 160.45. Choice beef values closed 1.07 higher yesterday afternoon to 232.05, their highest value since May 18. Choice beef was up another 55 cents this morning to 232.60. The 6-10 day forecast is showing warmer than normal temperatures, which should boost retail demand for the beginning of grilling season, but should also be beneficial for feedlot conditions and cattle weight gain. Nearby hog markets were lower today, keeping some of the buyer enthusiasm out of the cattle markets today. Tomorrow's Cattle on Feed report is expected to be slightly negative. Placements are expected to show about 103.3%, marketings at 96.8%, and on feed at 101.7%. Technical price action today was very quiet with both the Apr and Jun contracts trading inside of yesterday's ranges. The best traded Aug feeder cattle contract made new contract highs for the second session in a row, while the near month contracts settled within the upper end of their recent trading ranges.

LEAN HOG HIGHLIGHTS: Nearby hog markets were lower today, continuing their recent themes of volatility and bear spreading. Jun hogs closed 1.00 lower to 96.12, Jul hogs closed 55 cents lower to 100.62, and Aug hogs closed 25 cents lower to 101.75. Carcass cutout values were down 51 cents yesterday afternoon to 86.53, but were up 1.89 this morning to 88.42. February exports were disappointing, reaching just 452.4 mil pounds, down 7.9% from last February. Exports to Mexico, one of U.S.'s primary pork customers, only totaled 116.8 mil pounds, the lowest since July 2016, and down from a peak of 182.4 mil pounds in April 2018. Average weights have also been increasing, reported at 286.5 pounds for the week ending April 13 vs. 285.7 pounds the previous week, and 285.2 pounds this same week last year. News was released this morning that some Chinese officials are expecting Chinese pork prices to increase by 70% in the second half of this year. This is likely a major supportive factor for the deferred contracts today. The best traded Jun contract traded sharply lower on the open, testing its 20-day moving average support level, and ultimately closing back above it. Jun hogs are down 2.37. Aug hogs, the second most traded contract, briefly tested their 10-day moving average support level and closed back above it. Aug hogs are up 37 cents for the week so far.

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