Stewart-Peterson Market Commentary

Closing Commentary - June 14, 2019

Top Farmer Closing Commentary 6-14-19

CORN HIGHLIGHTS: Corn futures ended the week on a strong note with solid gains of 4-1/2 to 11 cents on old crop contracts. Dec 2020 closed down 1-3/4 at 4.19. Jul futures for 2019 closed 11 higher at 4.53, and Dec 7-3/4 higher at 4.63-1/2, both new high closes. The Jul contract eclipsed the high from 4.45 on May 29, 2018. The uptrend remains fully intact and today was the fourth consecutive close in the upper half of the daily trading range. The failure to fill a gap, a very positive USDA report, and continued weather adversity, along with short covering all have helped to propel prices higher. For the week, Jul futures gained 37-1/4, while new crop Dec gained 29-3/4. Concerns that the near term weather forecast continues to look less than ideal for corn growth and maturity, not to mentions farmers finishing planting also is providing underlying support. Strength in wheat and soybeans have also been supportive for corn futures.

SOYBEAN HIGHLIGHTS: Soybean futures had another up day with gains of 7 to 8-3/4 as Jul led today's rally closing at 8.96-3/4, slightly above the 100-day moving average. Jul futures have not closed above the 100-day moving average since late February. New crop Nov looked more impressive with its close above the 100-day moving average finishing the day at 9.23-1/4, up 8-1/4. For the week, Nov soybeans experienced a gain of over 40 cents. Upward momentum is growing on continued weather forecasts that look less than ideal for planting, as well as crop growth. It's all weather and the market will focus on this and pay little attention to anything else. However, note that there is a G20 Summit coming up and wouldn't that be a surprise if China began to bend an cooperate?

WHEAT HIGHLIGHTS: Wheat futures were mixed today with Jul Chi gaining 3 closing at 5.38-1/2, Jul KC 8 higher at 4.76-1/4, and Mpls Jul down 3 at 5.63-1/4. A reversal of spreads between Chi and KC appeared to be a feature late in the day. The differential between Chi and KC has been historical with Chi trading at 63 cents over KC and traditionally we see a premium of 20 or more cents KC over Chi. Expectations for a bigger supply of hard red winter wheat has been the primary emphasis for traders shorting KC and owning Chi. Lack of strong planting progress for soft red winter wheat last fall was the catalyst to lower acres. The wheat market as a whole, however, had a positive week with gains each day this week and prices finishing I the upper half to the very top of their daily trading ranges. A near term uptrend intact and Jul Chi now has a new upside objective of near 5.75. We're not sure there is a lot of impetus from the world production perspective, at least not until the last USDA report which raised projected world carryout. Yet, pesky dry conditions elsewhere, in particular the Black Sea, Australia, and Canada are supportive.

CATTLE HIGHLIGHTS: Cattle markets closed lower today, falling victim to a selloff in the hog market and lower momentum. Jun lives closed 27 cents lower to 108.77, Aug lives closed 45 cents lower to 104.27, and Oct lives closed 67 cents lower to 105.47. Aug feeders were down 70 cents to 135.52, and Sep feeders were down 70 cents to 135.80. Cash cattle trade in the country was minimal so far today, but cash trade did reach as low as 110 in KS yesterday. A few dressed cattle traded in IA today at 184. Choice beef values closed 5 cents lower yesterday afternoon to 222.10, and were up 21 cents this morning to 222.31. Though dressed weights have been very light recently, there are still thoughts that the short term production remains too high compared to retail demand. News this morning that the European Union has agreed to a deal that would allow U.S. beef a larger share of Europe's beef market was supportive. The best traded live cattle contracts were unable to hold their nearby 10-day moving average support levels. While prices did make gains for the week, daily momentum is pointing lower, especially with the weakness in hog markets.

LEAN HOG HIGHLIGHTS: Hog markets closed sharply lower today with Jun up 15 to 79.37, Jul down 2.02 to 81.35, and Aug down 2.20 to 80.62. The CME lean hog index is up 3 cents today to 79.57, its first positive move since turning lower on May 24. Carcass cutout values closed 50 cents higher to 83.01 on Thursday afternoon and were up another 85 cents this morning to 83.86. While the cash markets were somewhat positive today, the hefty weights and record slaughter pace have created a production chain speed that is vastly outpacing demand. This caused many traders holding long positions to finally liquidate today. The best traded Aug contract made a bearish outside day after a test of its overhead 10-day moving average resistance level. Prices are now at their lowest levels since early March.

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