Stewart-Peterson Market Commentary

Closing Commentary - September 17, 2019

Top Farmer Closing Commentary 9-17-19

CORN HIGHLIGHTS: Corn futures took away yesterday's gains and then some with futures contracts closing 6 to 6-1/4 lower as May led today's drop closing at 3.88-1/4. Nearby Dec closed 6 lower at 3.68, reaching a high today at 3.74-1/4, a 1/2 cent below yesterday's high. After a solid close yesterday, crop ratings indicated basically no change to conditions, but did confirm the crop running well behind schedule with the dense stage at 68% vs a 5-year average of 87% and mature corn tagged at 18% vs a 5-year average of 39%. Harvested acres is also off to a slow start at 4% vs a 5-year average of 7%. 14% of the crop remains in poor or very poor shape while 55% remains good to excellent. The crop needs a lot of time to mature and recent rains along with above normal temperatures may very well help to push the crop along. The most recent 6-10 day forecast indicates the entire Corn Belt above normal in temperatures. Longer range forecasts show little chance of frost through the end of September.

SOYBEAN HIGHLIGHTS: It was a relatively quiet session as bean prices drifted, losing 3 to 6-1/2 cents on a lack of new positive news, a relatively good forecast for crop maturity, and a likely increase in farmer selling. Prices have made a significant bounce from September 9 in which Nov beans bottomed at 8.51 before topping yesterday at 9.04. This gain of 50+ cents was likely met not only with producer selling but also expectations that end user buying could slow. The dollar was weaker throughout today's session and that may have provided some underlying support. Today's close, in the middle range, really doesn't tell us much technically other than the market failed to follow through for a fourth-consecutive day of higher closes. Soybean meal finished down about 1.00 and bean oil weaker. Providing additional support was the NOPA Crush figure for August at 168 million bushels vs the average pre-report estimate of 162 million. A year ago was 159 million.

WHEAT HIGHLIGHTS: Wheat futures finished weaker in all three exchanges with Mpls down 2 to 2-1/2, while KC and Chi each lost 4-1/2 to 6-3/4 cents. A lack of new positive news and the failure to push above the high from the last two sessions may have had traders stepping aside long positions in both winter wheat contracts. As for Mpls, we think the market is well supported as rain continues to be an issue for spring wheat harvest. Yesterday afternoon crop progress numbers indicated harvest at 76% complete, 5% ahead of last week but down from the 5-year average of 93%. We'll expect choppy activity to continue with prices finding general support from good export sales to date. Yet, the dollar continues to hover at the upper end of its trading range and at the top end of a longer term uptrend. This will likely keep export sales in check.

CATTLE HIGHLIGHTS: Cattle markets posted triple-digit gains today with some impressive technical buying. Oct lives were up 1.35 to 99.35, Dec lives were up 1.27 to 105.30, and Feb lives were up 1.32 to 111.77. Sep feeders were up 2.62 to 139.17 and Oct feeders were up 3.10 to 137.30. Choice beef values were down 26 cents yesterday afternoon to 220.62 but were up 1.39 this morning to 222.01. News this morning that the U.S. and Japan have reached an initial trade agreement was very supportive as most are expecting Japan to gain increased access to U.S. ag products. Beef is likely to be a main beneficiary of the trade deal. Carcass weights are not increasing and the glut of market-ready cattle has not shown up as expected. Big packer profits are likely to keep this trend going. The best-traded Dec live cattle contract made their highest trade and highest close since August 26. There is still a gap to fill on the Dec charts from 106.55 to 108.45 and from 108.45 to 111.17. Oct feeders had a very impressive session today, closing above their 50-day moving average level for the first time since August 8. Both the live and feeder cattle contracts have crept into overbought levels though momentum indicators are still pointing higher.

LEAN HOG HIGHLIGHTS: Hog markets posted sharp losses today in disappointing form despite the spread of African swine fever. Oct hogs closed 1.52 lower to 62.10, Dec hogs were down 3.00 to 67.67, and Feb hogs were down 2.30 to 73.55. The CME Lean Hog Index was down 1.23 today to 58.48. This was the lowest value since March 21. China's national average spot pig price was steady overnight. Carcass cutout values closed 45 cents higher yesterday afternoon to 68.66 and were up another 69 cents this morning to 69.35. The lack of a strong rally in the carcass values makes it seem as though the U.S. is not begun to sell massive amounts of pork to China. Without sales of pork to China, hog markets will have an extremely difficult time rallying. African swine fever was reported in North Korea for the first time overnight, and while there is not massive expectations for pork exports to North Korea, it does show how difficult the virus is to eradicate and keep from spreading. The technical price action today was disappointing, with Oct futures falling back below their 10 and 20-day moving average levels to make their lowest close since last Wednesday. Dec hogs finished at their limit lower though still made an inside session and held support at their 50-day moving average level. The Dec contract still has gaps and prices will need to trade down to 64.20 to fill the first and 61.75 to fill the second gap.

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