Stewart-Peterson Market Commentary

Closing Commentary - May 22, 2015

Stewart-Peterson Closing Commentary 5-22-15

CORN HIGHLIGHTS: Corn futures ended the day and week on a soft note. Futures lost anywhere from 4-1/2 to 5 cents as July led today's drop closing at 3.60. New crop Dec closed down 4-1/2 at 3.77-3/4, down from last Friday's close of 3.82-3/4. Generally favorable weather for most of the Midwest, weakness in competing grains, a rebound in the U.S. dollar this week, and a generally blase attitude, all added to the lows for the corn market as prices failed to hold on to gains from earlier in the week. We'll continue to hold with our defensive posture. Positive news is lacking, and from a historical perspective, if prices are trending lower into the latter part of May, they may continue to do so into the early part of June. Conditions aren't necessarily ideal, but they're good enough to suggest that this year's crop will be off to at least an average, if not better-than-average, start.

SOYBEAN HIGHLIGHTS: Soybean futures continued their slump as prices pushed into new lows with Nov down 11-1/2 on the close at 9.07. Corn has yet to reach its contract lows from last fall, but Nov surpassed the 9.27-1/2 mark early in the week and has continued downward. For the week, Nov beans have lost 27-1/2 cents. Nearby July also suffered losses on the week and closed 14-1/4 cents lower at 9.24-1/4 which compares to last week's close of 9.53-1/4. As we indicated on previous reports, the market's inability to get above the downward channel line resistance as well as critical moving averages left the stage set for potential drop or prices tipping over. This is exactly what has occurred in the last two weeks as the world begins to focus on increasing inventory projections.

WHEAT HIGHLIGHTS: Wheat futures gave back some of the gains they had from earlier in the week, losing anywhere from 2-1/4 in Dec to 6-3/4 in July Chi today. July closed at 5.15-1/2, a disappointing close after pushing higher in the overnight session. Prices failed to move above the high from May 18 which was Monday. The significance there is after a strong close above the 100-day moving average yesterday and the failure to follow-through today and now closed back under this key level, would suggest that prices may consolidate or retreat downward. Fundamental support comes from excessive moisture in parts of the Wheat Belt, and this could suggest quality issues as well as declining yield. Yet, for now, we'll take the bias that where it's too wet, this is a problem but additional rain elsewhere where it was significantly dry all spring, is making for ideal conditions for winter wheat elsewhere. In the end, what we're suggesting is we'd be surprised if there's significant change to the overall crop ratings. Nonetheless, we're respectful of the chance of a declining crop in the U.S., and so attention will then begin to focus on worldwide conditions.

CATTLE HIGHLIGHTS: Cattle futures ended the week with June closing 2 points lower at 152.12, and Feb up 40 at 154.15. The Cattle-on-Feed report had a supportive placement figure at 95%. The average estimate prior to the report was 100.9%. The range of estimate was 95.2-105.5%. Placements were neutral with the actual figure today at 101%,in  line with pre-report estimates of 101.4%, and marketings in line with expectations at 92% as compared to the average estimate of 92.5%. Cutout values have been on the decline the last two sessions. This is not a surprise. Retailers are backing away from the market after having booked supplies for the long weekend. Today's USDA Cattle-on-Feed report was released at 11 AM CT, and once released, appeared to have little to no impact. The lower placement number could have provided additional support for prices, but it almost appears that traders were willing to stay on the sidelines until after the weekend.

LEAN HOG HIGHLIGHTS: Hog futures ended quietly with nearby June losing 5, closing at 83.72, while Oct gained 25, closing at 74.17. It was a quiet session in front of a long weekend. Traders appeared content to hold positions into the weekend rather than take a strong stance. Estimated slaughter was a light 411,000. This is one of the smaller days in recent weeks. However, this was still more than a year ago's 393,000. AM pork cutout values were weaker by 2.05 at 85.00. We thought that June might a chance to trade to the mid to upper-80's. We're beginning to doubt the upper 80's. 

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