Stewart-Peterson Market Commentary

Closing Commentary - May 24, 2017

Top Farmer Closing Commentary 5-24-17

CORN HIGHLIGHTS:Corn futures finished 1-2 cents higher. Front month Jul was up 1-3/4 to 3.71-1/4. Sep was 2 cents higher to 3.79. Corn futures had a quiet day as neither buyers nor sellers could find any traction. Weather forecasts stay in focus as rain fell across the eastern U.S. Corn Belt this afternoon on already saturated fields. Despite Monday's crop progress numbers having 84% of the corn crop planted as of Sunday, any concrete numbers regarding what needs to be replanted and the condition of those acres is still very uncertain. Planting delays and rallies on wetness have a tendency to be fleeting, as improved weather can quickly bring a crop out of a stressed state. At this time, uncertainty in the overall quality of this year's corn crop may not be determined for many weeks or months later. The U.S. Energy Information Administration released this week's ethanol production numbers, which saw production slip to 1.01 million barrels and inventory stock piles drop to 22.7 million barrels. The ethanol grind has stayed supportive, along with general overall demand for corn.

SOYBEAN HIGHLIGHTS:Like the other grains, soybean futures saw quiet, two-sided trade as contracts finished mixed at the end of the trading session. Jul beans were unchanged on the day at 9.48-1/4, while Nov beans lost 1/2 cent to 9.48. After last week's aggressive selling pressure due to political instability in Brazil, soybean traders remain reluctant to push bean values higher. Weather is making it difficult to estimate plantings and the quality of those seedings, but progress has been steady at 53% complete in Monday's crop ratings. Instability and strength in the market provided by weather and demand are held in check by bearish forces of large South American supplies that are moving into the marketplace, keeping a lid on prices. Soybean prices will likely trade sideways in the short term until we have a clear estimation of planting acreage and crop quality in the weeks ahead.

WHEAT HIGHLIGHTS:Chi wheat futures saw choppy, two-sided trade before finishing 1-3 cents higher. Front month Jul Chi was up 3 to 4.32-1/2, while Sep was 2 cents higher to 4.46. Wheat futures saw buying strength across the entire complex, as KC wheat finished 1-2 higher, while spring what finished 4-6 cents higher. It was a combination of wet weather forecasts and cool temperatures bringing some premium into wheat futures at these depressed price levels. Difficult weather this spring has brought uncertainty into the quantity and quality of this year's winter wheat crop, and a clearer picture will likely stay unfocused until combines start rolling in the weeks ahead. Wet weather forecasts on the horizon could affect crop quality in the short term, but the large supply pile of U.S. wheat is keeping rallies in check. Globally, most major production areas are lacking news of consequence that could affect overall global production.

CATTLE HIGHLIGHTS:Cattle futures traded lower all session today, closing moderately lower, but still within the recent trading range. Nearby Jun live cattle futures closed 95 cents lower to 122.12, Aug closed 1.40 lower to 119.92, and Oct closed 1.30 lower to 116.75. With most grocery stores fully stocked up on beef heading into Memorial Day weekend, they have only been making light purchases recently. There is not much packer demand either, due to the short slaughter week next week. In addition, the shorter week will cause weights to increase. Both factors will pressure cash trade. As expected, today's fed cattle exchange produced lower prices than last week. For delivery in 1 to 9 days, 776 head were sold at a weighted average price of 132.37, 424 head were sold for delivery in 1 to 17 days at a weighted average price of 132.87, and 133 head were sold for delivery in 10 to 17 days at a weighted average price of 132.50. Bits in the country were seen at 132.00. The nearby Jun and Aug contracts closed below their 10 and 20-day moving average support levels, and the Oct contract closed in between the two moving averages. More weakness is expected to develop if cash trade cannot stay steady or beef movement is slow.

LEAN HOG HIGHLIGHTS:Hog futures closed with mixed and mostly negative finishes today, still fighting with the 80.00 mark. The nearby Jun closed 5 cents higher to 80.20, Jul closed 17 cents lower to 79.85, and Aug closed 5 cents lower to 79.85. Carcass cutouts closed 1.59 higher yesterday afternoon to 90.30 and were up another 33 cents at midday today to 90.63. This, plus lighter hog weights, provided some support, but a less-than-bullish Cold Storage report, and a possible slow-down in Chinese pork demand weighed on markets. A shortened kill schedule for next week, due to the Memorial Day holiday, was also a negative factor today. With both the Jul and Aug futures trading above 80.00, but unable to close above that mark, it is clear that traders are applying a fair amount of significance to the 80.00 level. At this point, the market does not want to take hogs above that level, but it is not out of the question in the future if pork demand remains strong.

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