Stewart-Peterson Market CommentaryClosing Commentary - October 09, 2015
Top Farmer Closing Commentary 10-9-15
SOYBEAN HIGHLIGHTS: Soybean futures ended the day with modest gains of 4-1/4 to 4-1/2 cents as Nov led today's rally, closing at 8.85-3/4. From a technical perspective, today was a very interesting session with prices trading both higher and lower. Prices pushed through the 21 and 40-day moving average and had a very negative tone early in the session, anticipating a negative USDA report. Today's low in Nov was 8.71-1/2. However, prices rallied after the report but ran into resistance at the 50-day moving average at 8.97 before finishing the day 4-1/2 higher, posting a bullish key reversal. Yet, the USDA report, by all accounts, was slightly negative. Yield rose from an estimate of 46.9 bu an acre to 47.2 and was 1/10 of a bushel higher than last month's report. Projected U.S. carryout edged higher from pre-report estimates at 398 mil to 425 mil. However, this was lower than the Sept estimate of 450 mil. World projected carryout in beans edged slightly higher at 85.1 mmt, up from last month's 85 mil and pre-report estimate of 84.6 mil. On an interesting note, USDA increased expected Brazilian forecasts to 100 mmt, an increase of 3.8 mmt and decreased the Argentine crop expectation by 3.8 mmt, from 60.8 to 57 mmt.
WHEAT HIGHLIGHTS: Wheat futures edged lower today, losing 2-1/4 cents on most futures contracts with Dec closing at 5.09-1/4. After posting a high of 5.31-1/2 on Wednesday, today's close at 5.09-1/4 was termed a disappointment. The weekly chart will show a hook reversal which means prices traded higher this week, but ended the week lower than last week's close. Yet, despite an increase of just under 2 mmt on today's world projected carryout, wheat prices managed to trade both sides of steady after the report. U.S. carryout was larger than expected at 861 mil versus an average estimate of 821 but below the Sept estimate of 875 mil. It could be today's trade, once the report was released, looked beyond the USDA figures and instead focused on weather developments elsewhere in the world which appears to be showing drying in Argentina and the Black Sea regions. In addition, parts of the U.S. are dry for the winter wheat planting. Overall, we don't want to focus too much attention on potential for weather, but with an El Nino pattern developing over a number of months, we certainly want to keep an eye on it as well.
CATTLE HIGHLIGHTS: Cattle futures finished higher for the fourth consecutive session with futures gaining anywhere from 27 to 67 points as of this writing. Apr was leading the way higher at 139.42. A rebound in the cash sector by the tone of 5.00 to 7.00 late this week helped provide underlying support as did ideas that the washout from last week was overdone. The question now is whether or not cattle futures may have room to move higher. We've made the argument that once cutout value prices dropped enough and the retail market responded, the focus may shift back over to the idea of relatively tight supplies. Yet, increased numbers in cold storage, increased competition and heavy animals have all been a problem and may yet continue to be so in the very near-term. We do believe that producers will stay more current just adding extra weight to heavy animals proved a big issue for price.
LEAN HOG HIGHLIGHTS: Hog futures ended mixed to firmer as Oct gained 10 at 73.90 and Dec 32 higher at 66.47. The uptrend in Dec has been intact since bottoming on July 13 where the market has now gained close to 10.00. However, with the discount to cash in Oct, expect Dec to climb at least another 4. We'll target the 70.00 or higher area to make sales unless we begin to see weakness in cash. That wasn't the case this week, however, as cash firmed and the index gained ground with a 46 point improvement today at 74.75. Slaughter, on the one hand, continued to be adequate yet not overwhelming. Today's figure at 430,000 suggests prices could move up further, but it will take greater competition from less beef and poultry to help provide support. Carcass cuts gained 1.89 yesterday, but on the AM report were off 48 cents.
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