Stewart-Peterson Market Commentary

Closing Commentary - October 21, 2016

Top Farmer Closing Commentary 10-2-16

CORN HIGHLIGHTS:Corn futures finished slightly higher with Dec corn up 1-1/2 cents to 3.525. Mar was up 1-1/2 to 3.6225. For the week, Dec corn lost 1-3/4, while the Jul contract was down 1-1/2. Rallies were limited by favorable harvest weather across the majority of the Midwest, and forecasts maintaining that weather for the weekend ahead. Secondly, the US dollar pushed to its highest price level in nearly nine months, as the index posted its highest price since 2/3. US dollar strength was supported by of US Federal Reserve Bank president stating that he expects a rate hike in December. Corn prices are also staying supported as demand is strong despite the overall bearish fundamental picture at this time. Warmer weather across the nation is also encouraging continued usage of ethanol, as both production was increasing this week and stocks declining.

SOYBEAN HIGHLIGHTS:Soybean futures stayed supported as contracts gained 5-7 cents this afternoon. Front month Nov was up 7-1/2 to 9.83, while Jan was up 7-1/2 to 9.9225. For the week, Nov beans gained 7-1/2 cents, while July followed suit, up 7-1/4 cents. Bean prices overall continue to stay in a trading range from 9.90 on the top to 9.34 on the bottom in the Nov contract. Soybean harvest should have made good progress this week, as weather has been favorable. Through that harvest, overall yield reports have been very strong, giving us the prospects of another record US bean crop this year. Hearing that basis levels are widening on the countryside is an indicator that the bean pipeline is starting to fill up, as extra beans are moving into the marketplace at these prices. Demand stays supportive as sales and shipments of beans are running well ahead of last year's pace. Bean prices will likely stay volatile and may be poised for some seasonal softening moving into the month of Nov. Prices this week may have seen a boost as Nov bean options hit expiration this afternoon.

WHEAT HIGHLIGHTS:Wheat futures was the laggard in the grain markets today as Chi was down 2 cents. Front month Dec was down 2-1/2 to 4.145, while Mar was down 2-1/2 to 4.35. For the week, Chi Dec wheat contracts lost 6-1/2 cents, and KC gained 3-3/4 cents. Wheat futures are confined in their sideways trading range, with strength in the US dollar pushing to its highest price level since Feb this afternoon as some traders worried that demand might begin to slip, given the global competitiveness of the wheat market. The fundamental picture remains relatively negative given the large carryout numbers for the US as well as global wheat stockpiles and a rising US dollar only makes things more difficult for US exporters to move the grain overseas. Wheat futures saw some support over the past week as drought monitors and long range weather forecasts are focusing on southwestern states and potential dryness developing over the next few months. Moisture will be critical for winter wheat headed into dormancy. Strength was evident with HRW contracts in positive territory for the week.

CATTLE HIGHLIGHTS:Live cattle futures had a strong end of the week session on follow through buying off yesterday's limit up finish. Oct closed 2.12 cents higher to 101.15, and Dec closed 1.75 higher to 101.87. Oct futures gained 5.25 on the week, and Dec gained 4.42 cents on the week. The near month Oct contract closing above the psychological level of 100/cwt could spark additional follow through into next week. Slaughter was estimated at 102,000, vs 109,000 a week ago and 103,000 a year ago. Boxed beef values were mixed. Choice cuts were up 2.08 to 179.97, and select cuts were down 16 cents to 167.58. The 12.39 difference between the two qualities is the widest in a long time. Cattle on feed numbers were bullish today. On feed was reported at 100% vs the estimated 101.3%; placements were 98% vs the estimate of 103.6%; marketings were 105% vs the estimated 106.2%. The majority of contract months traded decisively through their 20-day moving averages and closing well above. It is worth noting that the closes were generally not near the highs of the day. Support on Monday for Oct will be the 20-dy moving average of 99.90 and resistance at 101.75. Support for the Dec contract will be at the 20-day moving average of 100.80 and resistance at 103.10.

LEAN HOG HIGHLIGHTS:Lean hog futures had a positive though relatively neutral session going into the weekend. Traders focused mostly on heavily oversold conditions, drawing commercial buying support later in the morning, but futures ultimately closed well below daily highs. Dec futures finished 75 higher to 41.85, and Feb finished 70 cents higher to 48.72. Slaughter was estimated at 434,000, vs 407,000 a week ago and 431,000 a year ago. Carcass cutout values were stronger, reported at 74.02, which is 1.50 higher than yesterday. The nearby Dec contract opened well above yesterday's close and even managed to trade above its 10-day moving average for the first time since last week. Prices quickly gave up strength late in the session and finished below the resistance provided by the 10-day moving average. The Feb contract approached its 10-day moving average briefly but ultimately closed more than 70 cents off of it. Support on Monday for the Dec contract will be at 41.45, and resistance will be at the 10-day moving average of 42.25. Support for the Feb contract on Monday will be at 48.40, and resistance will be at the 10-day moving average of 49.45.

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