Stewart-Peterson Market Commentary

Closing Commentary - March 29, 2017

Top Farmer Closing Commentary 3-29-17

CORN HIGHLIGHTS:Corn futures had another quiet day, with most contracts steady to 1 cent higher. May closed 3/4 cent higher to 3.585, Jul closed 1/2 cent higher to 3.66 and new crop Dec closed 1/4 cent higher to 3.82. Ethanol futures dropped lower on reports of higher stocks despite ethanol production reported higher than last week and last year. Some of the bounce the last couple days can be attributed to some short covering after the downtrend began at the beginning of the month and ahead of Friday's Grain Stocks and Acreage report. The market appears to be settling in before that report hits at 11:00 ct Friday morning. The 10-day moving average was overhead resistance today, and although prices did trade through it, in a couple of contracts, closes were back below it. Similar to most days leading up to big reports, other news is quiet, and the market is focusing on preparing for the report.

SOYBEAN HIGHLIGHTS:Soybean futures took back yesterday's gains with another slide before Friday's report. The nearby May contract lost 3 cents to 9.69, Jul closed 2-3/4 lower to 9.795, and new crop Nov closed 4-1/4 cents lower to 9.68. The market is clearly factoring in bearish report results with a steep downtrend over the past month. Prices will likely drift sideways to lower tomorrow, as the market prepared for Friday's numbers. There is not much news out of South America to guide the markets until then, and with this week's quiet markets, most appear to be positioned as they want for Friday's report. These prices are not great for producers, but we cannot expect end users to come in and start buying until Friday's results are in. The market will likely push lower, so until then, demand will remain on hold.

WHEAT HIGHLIGHTS:Wheat futures closed slightly higher today on some inconsistency in weather reports and crop conditions. Both the May and the July contracts closed 1 cent higher today at 4.255 and 4.385 respectively. The Plains region does have rain in the forecast for the next week or so, but this time of year is notoriously difficult for forecasters to accurately predict weather. If less rain materializes than is predicted, the market could see a bounce. The US dollar continued its correction from the downtrend today, which does not help prices, but the overall trend is lower. Wheat acreage, projected at its lowest level since 1909, should come in supportive on Friday's report, but the world still has huge stocks, so it will take a while before the lower acreage will give any sustained support. We see sideways trading in the short term with the 10-day moving average as overhead resistance.

CATTLE HIGHLIGHTS:Live cattle futures nudged slightly higher today on friendlier than expected cash trade causing some short covering. The nearby Apr contract closed 57 cents higher to 121.35, Jun closed 1/4 higher to 111.85, and Aug closed 42 cents higher to 107.55. Today's fed cattle exchange activity was not necessarily positive, but was not as negative as the market was expecting. A total of 3,963 head were sold at a weighted average price of 131.17, versus last week's weighted average price of 133.35. There are few cash bids out there between 132 and 133, but cash trade is mostly undeveloped at this point. Beef values were softer at midday today, with choice down 50 cents to 219.07 and select down 1.25 to 211.77. Despite the strong support from the 10-day average the past few sessions, the market still appears to have run up too far too quickly. Falling beef values could support this theory, especially if cash trade numbers begin to taper off as well.

LEAN HOG HIGHLIGHTS:Hog futures posted a negative day despite positive finishes in the three nearby contracts before tomorrow's Hogs and Pigs report. The nearby Apr contract closed 20 cents higher to 65.30, May closed 7 cents higher to 69.47, and Jun closed 30 cents higher to 72.75. Yesterday's oversold trade led to a significant morning bounce of over 1.00, but prices quickly slammed back down on weekly weight data. Carcass cutouts had an ugly close yesterday, down 1.51 to 77.61 and were down another 1.84 to 75.77 at midday. Tomorrow afternoon's Hogs and Pigs report is expected to show a large supply of incoming hogs, which has caused an influx of new short positions and long liquidation. The market still looks a bit oversold, but the path of least resistance on the big picture is still lower.

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