Stewart-Peterson Market Commentary

Closing Commentary - October 16, 2019

Top Farmer Closing Commentary 10-16-19

CORN HIGHLIGHTS: Corn futures edged lower, closing with losses of 1/2 to 1-1/2 cents as Dec led today’s small losses. Bulls will argue that the market, trading 5 cents or more lower, had an impressive climb late in the session, finishing uneventful. Bears would argue there’s a lack of new friendly news, and what news there has been is viewed as negative. The near-term weather forecast looks conducive for harvest. Yet, the 6-10 day forecast again calls for above-normal rainfall for the period of October 21 -25, potentially slowing harvest even further. Yield results continue to be mostly mixed with most producers relating to Top Farmer that yields are off 5% -25% from a year ago. A decline in ethanol futures on news that the EPA wants to adjust how it sets refinery targets was viewed as negative and consequently responsible in part for this morning’s push lower. From what we understand, there will not be a reallocation of gallons lost from 2016 – 2018. Increased chances for rain in South America next week in both Brazil and Argentina were viewed as slightly negative. Brazil is off to a slow start to its bean planting due to dry conditions. Should dry conditions continue, this could suggest a later corn crop.

SOYBEAN HIGHLIGHTS: Soybean futures lost ground today, losing 2-1/2 in Nov 2020 to 6-1/4 on Jan, closing at 9.42/14, its lowest close in four sessions. A weak finish yesterday and again today, suggests traders may be growing leery that prices can continue to move higher in front of harvest. Yield results to date are varied but we continue to believe that last week’s snowstorm and wet weather in the forecast could shave another bushel off yield. Therefore, while the last two sessions look somewhat soft in trade no technical damage has been noted on price charts. A 1% increase in the good to excellent category was noted on crop progress numbers yesterday. We don’t feel this has much, if any, bearing. 14% of the crop remains as poor to very poor. Time will tell, but we are curious as to how many bushels may have been lost by frost. Probably not a lot, but still in a year like this where supply is trending downward any loss becomes more magnified.

WHEAT HIGHLIGHTS: Jul Chi wheat got a boost today gaining 3-3/4 to 6-1/4 cents, while KC gained 1-3/4 to 3-3/4, and Mpls 4 to 5 cents higher. Chi likely found support on technical buying, short covering, and the idea that rain in the forecast will likely put a kibosh on some winter wheat acres, particularly soft red winter planting progress. This could mean less acres in the year ahead. Additionally, yesterday’s crop progress numbers indicated that the remaining spring wheat acres are likely not to be harvested. Yesterday’s figures indicated 94% harvested vs a 5-year average of 100%. Expectations for rain in the forecast by the weekend and into next week will likely suggest this wheat will not make its way into the harvest pipeline.

CATTLE HIGHLIGHTS: Cattle markets closed with mostly positive gains today, with Oct lives up 1.35 to 112.35, Dec lives are up 42 cents to 113.87, and Feb lives were up 5 cents to 119.60. Oct feeders were up 22 cents to 145.22 and Nov feeders were down 15 cents to 145.92. Choice beef values closed 80 cents higher yesterday afternoon to 218.02, their highest value since September 19. Choice beef was up another 98 cents this morning to 219.00. With rallying beef prices and a smaller show list this week, packers will likely need to pay up for cattle later in the week. Tomorrow’s Export Sales report will likely show slower beef exports or even cancellations. Currency relationships are beginning to favor Brazilian and Argentinian beef products over the U.S. prices. Dec live cattle closed above their 200-day moving average level today for the first time since late April. This is the highest close since July 26. Dec live cattle are sharply overbought but the trend still looks higher. Nov feeders closed slightly lower today, but only after a successful test of nearby support at the 200-day moving average level. Nov feeders are overbought as well, but without a break in the fundamentals, prices appear to want to stay supported.

LEAN HOG HIGHLIGHTS: Hog markets had a choppy though mostly lower session today, with Dec hogs down 1.50 to 70.62, Feb hogs were down 30 cents to 78.85, and Apr hogs were down 2 cents to 84.87. The CME Lean Hog Index was up 81 cents to 62.92. China’s national average spot pig price was up nearly 0.8% overnight as is now 1.15% for the week, up 24.9% for the month, and up 165.9% year to date. Carcass cutout values closed 12 cents higher yesterday afternoon to 78.06 and were down 1.05 this morning to 77.01. While sellers were active today, the resiliency of pork prices despite a 9.2% increase in U.S. pork production last week shows that export activity is strong. South Korea reported another case of African swine fever overnight near the border and many are now suspecting that North Korea pork production could be in jeopardy. The best traded Dec lean hog contract was unable to make its second close in a row above its 200-day moving average level. Still, prices held onto nearby support at the 100-day moving average level in an inside trading session. Feb hogs traded at their highest levels today since July 30, and despite the negative close today, the trend still looks higher.




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