Stewart-Peterson Market CommentaryClosing Commentary - February 03, 2016
Top Farmer Closing Commentary 2-3-16
SOYBEAN HIGHLIGHTS: Despite a weaker dollar, soybeans were under pressure, finishing with losses of 7-1/2 to 9-1/2 as nearby March led today's drop. After a very encouraging session and strong finish yesterday, one would hope that prices might try and make a break to the topside. Instead, they closed back under the 100-day moving average. The 50-day moving average did act as support. As indicated in previous reports, we do not feel there is a strong enough trend of weather adversity in South America to have much influence at this time. Therefore, when prices do not follow through to the topside, traders are quick to go short. We have seen this a number of times in recent weeks. We feel the market is well supported with good demand, and until the entire Southern Hemisphere crop appears that it is going to mature without much of a problem, we believe there is limited downside. Ultimately, we do have to respect the idea that, if yields run close to anticipated in the Southern Hemisphere, beans could push back down toward 8.50 or lower.
CATTLE HIGHLIGHTS: The entire meat complex pushed into positive territory with cattle leading the way. After some sluggish near term activity, it appeared prices took into account yesterday's firming values and moved higher with Feb cattle trading at their highest level since early Jan. As of this writing, Feb was trading 137 points higher at 137.10. Deferred months were up 40 to 120 points. Feeder cattle were 65 to 90 points higher. Hogs were higher as well. Estimated slaughter was 98,000, which compares to 109,000 yesterday, another day of lighter numbers due to winter storms. Cutout values were mixed with choice down 35 at 222.12 and select up 42 at 218.05. We would like to think that, in order for Feb to push much above the 137 mark, it is going to take additional increases in cutout values. We are not sure they are high enough to support new upward pressure for prices in the live cattle contracts.
LEAN HOG HIGHLIGHTS: Lean hog futures gained back some of yesterday's losses with nearby Feb last trading 55 higher at 64.75, while Apr gained 65, last trading at 69.75. Today's cutout value lost 1.14, which would suggest yesterday's drop-off in futures was warranted. We believe that the market is beginning to run out of gas to the topside. The exception, of course, would be if cattle can continue to move higher, traders may try and push hogs toward their fall highs. Estimated slaughter today was a light 395,000. We are not surprised at this figure, given the winter storm system had lingering effects throughout much of the Midwest today. Look for bigger slaughter numbers on Thursday and Friday.
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