Stewart-Peterson Market Commentary

Closing Commentary - November 16, 2018

Top Farmer Closing Commentary 11-16-18

CORN HIGHLIGHTS: Corn futures finished with modest losses today as Dec was down 2-3/4 cents to 3.64-3/4, while Mar was down 2-1/2 cents to 3.75-3/4. For the week, Dec corn futures dropped 5 cents, while the Mar contract posted a 5-1/2 cent loss. Corn futures continue in their sideways trading fashion, pushing at the bottom of the trading range in today's trade. Overall news has stayed relatively quiet, with the exception of the USDA weekly export inspections today. The USDA announced weekly export sales at 35.1 million bushels and 43.8 million bushels of shipments. This puts total exports currently at 91% of last year's levels, and commitments up 15% of last year's pace. Both these numbers are ahead of the USDA estimated averages, and stay as a bullish factor underneath the corn market, given the demand. Corn harvest is in the last leg, and weather maps across the majority of the Corn Belt are staying relatively dry with the exception of some snow moving across the northern tier over the next few days. Technically, corn futures are challenging support levels, but with Mar holding 3.75 in today's trade, despite being pressured early, keeps some encouragement that support levels may still hold. Seasonally, corn prices tend to start to work higher from now until early June. At this stage, with concerns regarding trade, as well as more than ample supplies of corn, the market is likely to move anywhere fast.

SOYBEAN HIGHLIGHTS: Soybean futures rallied off of early session lows to finish with mild gains in today's trade. Front month Jan beans were up 3-1/2 cents to 8.92-1/4, while the Mar contract gained 3-1/2 cents to 9.05. For the week, Jan beans posted a 5-1/2 cent gain, while the Mar contract was 5-3/4 cents higher. Bean futures saw early selling pressure as the Jan contract pushed to a low of 8.81-3/4, before a comment from President Trump on the news lines regarding trade with China quickly sent buyers into the market. He made statements that were favorable in the direction of working on a potential trade deal with our largest importer of soybeans, but still much work to do. Regardless, it still set the market into positive territory with a more positive tone as we move towards a key meeting between the two leaders at the G20 summit the last week of November in Argentina. On the news front, the USDA posted this week's export sales numbers and shipments with 17.3 million bushels of sales, and 49.9 million bushels of shipments. Currently, total exports are down 42% from a year ago and total commitments are down 32%. As evident, China remains absent from the market, only at this stage, purchasing 3% of their total from last year. Strength was seen in the market in the soybean meal export side as commitments were at 21% above last year's levels, and crush margins have kept support in bean prices as the meal export market remains favorable. In additional export news, the USDA announced a small sale of 3.7 million bushels of soybeans to unknown destinations for the 2018/19 crop year. In the past handful of days, we have seen multiple posted sales as potential for more favorable trade negotiations, as well as interest from other international buyers seems to be moving forward in this time window. Unfortunately, the window for key export sales is closing, as South American beans are only a few months away.

WHEAT HIGHLIGHTS: Wheat futures were choppy in today's trade, while Chi contracts finished mixed. Front month Dec was up 1-1/4 to 5.06-3/4, while Mar gained 1/2 cent to 5.15-1/4. All remaining deferred Chi contracts saw small losses in today's trade. Other wheat varieties were mixed in their trade as KC Dec hard red winter wheat contract was up 2-3/4 cents to 4.82-3/4, but Mpls spring wheat Dec was down 3-1/2 cents to 5.71-1/4. For the week, Chi Dec contract gained 4-3/4 cents while the Mar contract was also 3 cents higher. Much of the focus has been on the KC winter wheat contracts, as before today's trade, the front month contracts moved into 2018 lows. Despite weakness in the futures markets, cash prices have stayed firmly sideways, as local demand has stayed strong. The biggest key going forward, will be the shift of export demand to U.S. exporters with a potentially tighter global supply picture. The USDA put last week's export sales and shipments at 16.1 million bushels of sales and 9.7 million bushels of shipments. These are considered to be bearish amounts that have wheat exports currently down 20% from last year's levels and still trading below USDA targets. The strength may be also moving into the KC hard red winter wheat contracts as weekly crop ratings sold 54% of their futures crop in good to excellent condition, while planting was at 89%, still trailing the 5-year average. The biggest question is 89% of what acres are still unknown given less than favorable weather for this year's planting window as heavy rains came through in early fall, with a quick turn to winter in the past few weeks.

CATTLE HIGHLIGHTS: Cattle markets were mixed today as front month Dec gained 0.20 cents to 115.35, while Feb cattle was up 62 cents to 119.725. For the week, Dec cattle gained 0.775 cents, while the Feb contract posted a 1.925 gain. Feeder cattle futures saw selling pressure today as front month Jan lost 1.325, but still finished 2.725 higher on the week. Trade stayed mixed today, as the market was looking for direction from cash trade, as well as retail values. Strength in the hog market did provide some spillover support in the cattle futures today as front month hogs did finish limit higher. Cash trade this afternoon was starting to see some development with trade near 114.00 in TX, which would be relatively steady to slightly softer than last week's values. In addition, dress trade was seen at 178.00, slightly softer than last week. Midday retail values were softer, with choice carcasses down 0.22 cents to 213.33, while select carcasses were 0.02 cents lower to 197.56. Over the course of the week, carcass values seem to have stabilized, and have been trending slightly firmer as we move towards late afternoon. In other news, weekly export sales were announced this morning at 13,600 metric tons for last week, up 18% from the previous week but still below the 4-week average. Overall, beef sales have continued to run strong this year, and with current levels of supplies available, the demand pace moving into 2019 will be a key to support price.

LEAN HOG HIGHLIGHTS: Lean hog futures surged higher in today's trade as front month Dec finished limit higher to 60.075, Feb and Apr hogs also finished limit higher with the Feb contract closing at 66.75. For the week, the Dec contract showed good strength finishing 4.275 higher, while the Feb contract had a strong week posting a gain of 7.25. Strength was seen throughout the entire pork complex as Jun, Jul, and Aug contracts posted new contract highs today as money continues to support the hog market. A combination of trade news being more favorable with China, as well as ongoing concerns regarding African swine fever within that nation, helped bring more buyer support in the hog market again today. During the course of the trading day, a friendlier tone has been established between the U.S. and China regarding trade and the tariffs seen on agricultural products. While at this stage things can still change very quickly, the fact that U.S. and Chinese negotiators are talking is considered favorable overall. The growth of African swine fever continues to be a major focus of the market, as today was reported that a wild boar found in the Sichuan province, which is the country's top producing region for pork. Continued reports show that this disease may still be the tip of a large iceberg that is still developing, and evidence that ASF is not under control within Chinese borders. The market is seeing strength on potential exports of U.S. pork to China to meet the void of hogs being affected by the disease, those stages are not evident yet. The USDA announced weekly pork exports of 20,500 metric tons for last week, down 3% from the previous week but still 14% above the 4-week average.

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