Stewart-Peterson Market CommentaryClosing Commentary - March 26, 2015
Stewart-Peterson Closing Commentary 3-26-15
SOYBEAN HIGHLIGHTS: It was a relatively quiet session, but prices finished on a soft note losing 2 in Nov closing at 9.55-1/4 to 4-1/4 lower in May closing at 9.74-1/2. It appears the market is now beginning to mark time, or consolidate, prior to next Tuesday's ever important Acreage and Stocks report. We wouldn't be surprised to see the stocks figure slightly friendly while the acreage number could be negative. Export sales were supportive today at 18.6 mil, which puts year-to-date total at 1.7814 bil. The market only needs to see 1 mil bu on a weekly basis to meet USDA projections. Estimates for the USDA report have quarterly stocks at 1.341 bil, which compares to last March's stocks report at 994 mil. So, on the one hand, with stocks larger and expectations that export activity will turn to the southern hemisphere, bean prices could be in trouble quickly. On the other hand, export sales continue to exceed expectations, and with the southern hemisphere crop not in the bin yet, there's always potential for harvest delays or concerns with quality or quantity. Consequently, it appears end users are still willing to step up to the plate and buy US.
WHEAT HIGHLIGHTS: Wheat futures were the big loser today in row crop commodities as they suffered sharp losses, losing 17 to 19-3/4 in July Chi. Prices came under heavy selling pressure once futures violated the 50, 40 and 21-day moving averages. Significant liquidation of recent long positions as well as the establishment of new short, was viewed as primary reasons for prices to push lower today. From a fundamental perspective, export sales activity was not very encouraging at 3.8 mil. This was termed bearish and a disappointment. Quarterly stocks are expected at 1.143 bil, which is above last year's 1.057. Increased supplies, technical weakness today, and a general bias that wheat prices are destined to neither move significantly higher or lower from current levels is keeping the market range-bound.
CATTLE HIGHLIGHTS: Cattle futures closed quietly and with small losses. Nearby April closed 5 lower at 161.75 while Aug lost 55 closing at 149.05. We think the market may be reaching a near-term peak as prices have consolidated the last three sessions. Yet, the strong recovery remains in tact with futures holding at the upper end of a 15.00 rally. Strong cash prices with most bids anywhere from 160 to 163 is providing underlying support as is continued strength in cutouts. Feeder cattle continue to remain in a strong uptrend as well, but futures may have found their near-term peak. Day's end had feeders closing anywhere from 2 to 97 lower. If you're holding feeders in the yard, we're suggesting now is a much better time to begin selling and perhaps aggressively. Take advantage of this rally.
LEAN HOG HIGHLIGHTS: Traders seemed to be interested in buying hogs and selling cattle. Hog futures finished anywhere from 55 to 150 point higher as May led today's rally. May was heavily sold earlier in the week, but it looks like bull spreading in the hogs, as well as traders buying hogs and selling cattle, were primary features in today's activities. We've continued to argue that we believe the hog market is likely undervalued. We like the overall consolidation in June hogs with support now between 73.00 and 75.00. We'll look for a recovery and bounce to 80, the 50-day moving average. That implies that we're prepared to move out of our short positions and go long. That will be a change on today's recommendations.
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