Stewart-Peterson Market CommentaryClosing Commentary - January 28, 2015
Stewart-Peterson Closing Commentary 1-28-15
SOYBEAN HIGHLIGHTS: Soybean futures saw two-side trade this afternoon before finishing 3 to 4 cents lower. March beans were down 3-1/2 to 9.70-1/4, followed by May down 4 to 9.77-1/4. Trade continues to focus on the progress of South American crops as yield forecasters continue to project an optimistic look at the size of the South American harvest. Weather continues to be favorable with some rain projected to help clear up dry pockets in Brazil as well as continued favorable weather in Argentina. Demand focus weighs on this market given the supply picture. Concern of additional Chinese cancellations and shipment of export sales from the US to Brazil will keep any buyers on the sidelines. On the positive side, soybean meal continues to show some good demand as those contracts finished with moderate gains this afternoon. Expansion in the hog market as well as poultry operations are keeping an undercurrent of demand under the meal contracts. This is providing some short-term support, but overall the big picture continues to be heavy with the beans moving forward.
CATTLE HIGHLIGHTS: Live cattle futures saw a mixed trade this afternoon as front month Feb cattle pushed 1.12-1/2 higher to 153.95, and April was up 50 cents to 151.50. This was the second day in a row of higher trade after yesterday's limit-higher close in the front month contracts. It may be more of a product of short covering after the pullback off of contract highs a few weeks ago. Buying enthusiasm was dampened by continued weakness seen in retail prices at yesterday afternoon's wholesale beef prices closed sharply lower. Today at mid-day, retail values were quiet as choice carcasses were 33 cents higher, 46 cents higher on the select cuts. Continued weakness of retail prices has cash markets quiet with some trade in Nebraska around the 159 to 160 a pound area, down from last week's numbers. Cattle futures continue to be pressured amid concerns that demand for US beef both here and abroad is slipping. Historically, retail prices have a tendency to slide lower as we move into Feb which is keeping buyers on the sidelines. For now, we'll stay defensive as the market up turn may be more of a corrective bounce then a change in direction. Focus will be on the strength or lack of strength in retail demand and its effect on cash trade going forward.
LEAN HOG HIGHLIGHTS: Hog futures posted strong gains as contracts from 2.10 to limit-higher this afternoon. Front month Feb hogs closed 2.10 higher to 71.52-1/2, followed by April up 2.90 to 74.95. Both the May and June contracts finished limit-higher this afternoon. Lean hog futures saw a round of short covering as labor issues in the West are showing signs of progressing to a resolution. Overall, the hog fundamentals are weak, and this bounce could be an opportunity to get defensive again in the market. Cash prices continue to push lower, and retail prices slid an additional 31 cents per carcass at mid-day today. The western labor issues had the market concerned regarding a backlog of pork as well as beef products not being able to move out for exports, and if those labor issues get solved, we could see some product movement again triggering that short covering bounce we saw today. A strong dollar isn't aiding in those export pictures and may actually open up the borders for additional imports buying cheaper pork from other out-sources.
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