Stewart-Peterson Market Commentary

Closing Commentary - December 01, 2015

Top Farmer Closing Commentary 12-1-15

CORN HIGHLIGHTS: The short-term technical picture continues to improve for corn futures as contracts put in a second positive day. Contracts ranged from 1 to 2 cents higher with Dec up 2 cents to 3.67, followed by March up 1-1/2 to 3.73-3/4. Follow-through strength in the bean market carried over in support of corn futures this afternoon. Trade in the March contract pushed into key technical resistance levels at 3.73 which was the 20-day moving average and held through the end of the afternoon. This could bring some additional short-term covering as funds have been growing their short positions over the past months. In addition, support came with the EPA RFS mandate announcement late yesterday afternoon. The EPA raised its renewable fuels obligations for 2015 and 2016 which were in line with expectations for corn and at least not disappointing. With the mandate pushed to 14.5 bil gal of ethanol usage in 2016, this could have extra usage of 100 to 150 mil bu of corn. In an otherwise quiet day, trade at this stage may be more technical than fundamental as we move forward in the short-term.

SOYBEAN HIGHLIGHTS: Soybean futures continued their positive short-term trend as contracts finished 7 to 8 cents higher. Jan beans were up 8-1/4 to 8.89-1/4, followed by March up 8-1/4 to 8.91-1/2. Strength in the bean oil market, as well as short covering, helped provide additional support of the bean market this afternoon. Being fueled by the EPA mandate for use of biodiesel, soyoil futures finished 70 cents higher this afternoon, helping provide some support in the bean market. In addition, traders are still focused on the new Argentina political situation and the effect of their export tax on soybeans. Reports are showing that a plan for a slow reduction of this tax is in the works which will not be burdensome to soybean prices. The biggest support for the move this afternoon continues to be an improving technical picture. After posting a weekly reversal last week, bean futures today closed above the 50-day moving average which bean futures haven't traded above since mid-Oct. 8.90 proved to be resistance this afternoon as this price run is not nearly 50 cents off the most recent low and may have produced some farmer selling.

WHEAT HIGHLIGHTS: Wheat futures continued to struggle despite the strength in other grains as futures lost 3 to 6 cents. Front month Dec wheat finished 3-1/2 cents lower to 4.56-1/2, and March was down 4 to 4.71-1/2. Late yesterday afternoon, the USDA increased its good to excellent rating for the U.S. winter wheat crop from 53% to 55%, its final rating for 2015. With a burdensome wheat supply already on the books, the prospects of this year's winter wheat crop progressing only adds to the selling pressure in a market that can't seem to find its legs. Add to that a strong U.S. dollar and export demand down, buyers are far and in-between in the wheat market. Underlying support can be found as pockets of global weather may be affecting some wheat output. This afternoon, Informa Economics reported that Australia's government lowered its estimated wheat crop to 24 mmt, suggesting that the USDA may do the same later in future reports. Regardless, the wheat supply globally stays flush, and prices are still competitive.

CATTLE HIGHLIGHTS: Cattle futures stayed choppy and in their sideways, rangebound trade despite flipping off of lows and finishing with modest to strong gains this afternoon. At the 1 PM settle, Dec cattle, with 2 days left in trade, ended 2.05 higher to 132.10, followed by Feb up 2.27-1/2 to 134.62-1/2. In afternoon electronic trade, cattle prices stayed steady to slightly firmer, at the time of this writing. News stayed relatively quiet as cash trade stayed undeveloped so far this week, and concerns regarding demand kept buyers on the sidelines early this morning. At one time, cattle futures were trading over a point lower before a late afternoon reversal. Cash cattle trade remained dead quiet today as both bids and asks were poorly defined. Very few scattered asks in the North had dressed bids at 195 and live in the South near 132. Today's kill totaled 108,000 head, 2,000 less than a week ago and 4,000 less than a year ago. Beef cutout values were trading lower at mid-day with choice carcasses losing 9 cents, select down 1.08. Feeder cattle were excessively volatile like lives this afternoon. At settle, feeder cattle futures were trading nearly 5.00 off their lows with the Jan contract up 1.65 to 164.40. In afternoon electronic trade, feeder cattle futures continued to push nearly another 1.00 higher at the time of this writing.

LEAN HOG HIGHLIGHTS: Hog futures finished with modest to strong gains this afternoon as Dec hogs settled up 1.52-1/2 to 59.95. Feb hogs were 2.97-1/2 higher to 59.77-1/2, followed by Apr up 2.65 to 64.20. In afternoon electronic trade, Feb hogs did touch limit higher, but trade has stayed steady from the 1 PM settle prices. Hog futures are experiencing a short covering rally which may have helped promote the turn in live cattle this afternoon. Bullish traders are focusing on the potential of seasonal upturn in cash prices, as well as improving pork demand as we move into the Christmas holiday season. Retail values will be looking at the important higher-priced ham cuts as we move into the time when retailers are securing those meats for Christmas dinners. Pork carcass cutout values were down 69 cents at mid-day, as belly, rib and picnic prices were stronger. 

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