Stewart-Peterson Market Commentary

Closing Commentary - September 16, 2019

Top Farmer Closing Commentary 9-16-19

CORN HIGHLIGHTS: Despite a weak export inspections figure at 16.6 mil bu, corn futures traded steady to firmer throughout the session and eventually finished near the high of the day gaining 4 to 5-1/4 cents as Dec led today’s rally closing at 3.74, after reaching a high today at 3.74-3/4. Today is the highest close in Dec corn futures since August 19. Strength in wheat, as well as perhaps a growing concern that there are just too many bushels well behind the pace for full maturity is suggesting a potential tighter crop. Strong basis levels are also noted. The near term weather forecast, however, couldn’t be more ideal as the next 7 to 10 days will likely bring above normal temperatures for the Midwest and allowing crop that is immature to move forward down the maturity pipeline. We argue this is perhaps the cap over the market as it may be easy to contrast this forecast with one that might suggest well below normal temperatures. That just is not in the cards or in the near term forecast.

SOYBEAN HIGHLIGHTS: Soybean futures edged higher today gaining 1-1/4 to 2-1/2 cents as July led today’s small rally. Nov closed at 9.00, up 1-1/4, after trading above the 9.00 mark for the second consecutive session, but refusing to close above this level. In our recommendations, it says to exit on a close above 9.00. Today’s close at 9.00 does not have you exiting. A firmer dollar seemed to have little impact today. Higher energy prices with soybean oil showing gains of 85 cents in the Oct and Dec contracts is reflective of energy prices which are screeching higher due to a oil refinery in Saudi Arabia that was bombed by Yemen rebels through a drone attack. The U.S. has indicated they believe Iran is behind this action. Warmer temperatures in the forecast could help the crop mature in a more beneficial way. Yet, we expect crop progress to show that ratings will continue to indicate many acres need well beyond a normal frost. Supporting prices continue talk that China may be interested in buying more U.S. beans after a small purchase last week.

WHEAT HIGHLIGHTS: Wheat futures finished firmer on all three exchanges with gains of 3 to 3-1/2 in Mpls, 7-3/4 to 9-1/4 in KC, and Chi 5-1/4 to 5-3/4 higher. Inspections at just under 17 mil bu were viewed as neutral to slightly negative. A higher dollar was also noted today and yet wheat prices moved higher. Ideas that growing demand for U.S. wheat due to drying weather in Argentina and expectations that farmers’ selling will remain slow is helping provide underlying support. Traders may be moving out of short positions as well as the technical picture is beginning to look firmer. A lack of good harvest weather for spring wheat, both in the U.S. and in Canada, is helping to provide underlying support. Good weather in the near term should allow for winter wheat planting to make progress.

CATTLE HIGHLIGHTS: Cattle markets had a mostly negative session today, though prices were able to hold within recent trading ranges. Oct lives were down 7 cents to 98.00, Dec lives were down 35 cents to 104.02, and Feb lives were down 65 cents to 110.45. Sep feeders were up 5 cents to 136.55, and Oct feeders were down 37 cents to 134.20. Choice beef was up 91 cents at Friday’s close to 220.88, and was up another 28 cents this morning to 221.16. Average weights have not been increasing as is the seasonal trend which has been a supportive factor as of late. Pasture and range conditions have worsened significantly over the last month and this has helped to keep the feeder markets cheap. Cheap feeder markets, as well as cheap corn, has kept many traders concerned that cattle placements could surge in the coming months. The Sep Cattle on Feed report will be released on Friday afternoon. Price action today was relatively quiet with Oct lives still holding onto their 10-day moving average support level after a brief test of their 20-day moving average resistance level. Dec lives also held onto nearby support at the 20-day moving average level. Live cattle contracts made bullish key reversals on the weekly charts last week, though the gains may have been a bit too much too quickly as prices may be a bit overbought in the short term. The best traded Oct feeder cattle contract was choppy for the majority of the session and then closed moderately lower. Feeder markets are slightly overbought as well.

LEAN HOG HIGHLIGHTS: Hog markets closed sharply higher yet again with Oct up 3.30 to 66.47, Dec hogs are up 4.50 to 68.70, and Feb hogs were up 4.50 to 75.10. Hog markets were limit up yesterday on news that China was looking to buy U.S. pork products ahead of the next round of trade talks as a goodwill gesture. This morning, Chinese officials confirmed that China has dropped tariffs on U.S. pork, further indication that we may be drawing closer to a trade deal. Of course, without a 62% tariff on pork products, China could step in to replenish at least a portion of their pork supplies that have been lost due to ASF. Heavy average weights and a fast slaughter pace here in the U.S. have kept pork supplies heavy and carcass values low. Carcass cutouts were down 1.98 at yesterday’s close to 70.47 and were down another 2.09 this morning to 68.38. If pork exports pick up as expected, we should see pork values begin to reverse their recent trend. The best traded Oct contract made its highest close today since September 4 as momentum is still pointing higher. Dec and Feb both closed at their extended limit higher with both contracts making their highest close since July 31.




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