Stewart-Peterson Market Commentary

Closing Commentary - May 17, 2019

Top Farmer Closing Commentary 5-17-19

CORN HIGHLIGHTS: Corn futures moved higher again today finishing with gains of 1 to 4-1/4 cents as front month Jul led today's rally closing at 3.83-1/4. On Monday, Jul corn futures bottomed at 3.43, so the gain of near 40 cents off of Monday's low looks impressive an encouraging. Today's close above the 100-day moving average was the first time this has occurred since early February. New crop Dec closed 1-3/4 at 3.98-1/4, its highest close since late March. Growing concern that the near term weather forecast continues to point toward copious amounts of rains in parts of the Midwest suggesting late or no planting is providing underlying support and the primary catalyst for a significant weekly bullish key reversal. Weather is taking front and center stage. Some analysts are suggesting a potential prevent of 4 to 5 mil acres. Also, with the crop only 30% planted as of last Sunday, that leaves 70% to go yet, and the yield drag of likely 2 or more bushels on trendline is also being factored in by many analysts. Ultimately, this could mean a decline in carryout up close to a billion bushels if these numbers have validity.

SOYBEAN Highlights: Soybean futures ended the week on a soft note with double digit losses of 17-1/2 to 18 cents as Jul led today's drop. After gains the first four sessions of this week, prices slipped back to the 10-day moving average where they found support. An uptick in relationship concerns with China, expectations that some corn acres could move to beans, and a lack of friendly news and likely sell stops being triggered once prices began to sell off all pressured prices today. Ample projected inventory is reflected on last week's Supply and Demand report may have had impact as well as the trade looks at a very adequate carryout number.

WHEAT HIGHLIGHTS: Wheat futures traded stronger through much of the session, but failed to hold gains in Chi as the week ended and traders were busy buying KC and selling Chi reversing spreads, which have seen Chi gain significant ground in recent sessions as Jul Chi went over 50 cents above KC, a very wide spread. Wheat had an interesting week with strong weekly gains despite today's losses in Chi. A very friendly bullish key reversal follows a daily weak reversal that occurred on Monday. Monday's low in Chi was 4.18-1/2, and close at 4.37. Today's close at 4.65, despite down 2 cents is a big victory for the week as wheat prices are experiencing additional weather concerns as well. Primarily too much moisture and disease concerns. Dryer weather in Australia has been noted. With that being said, wheat was still more of a follower of corn, but did seem to be the commodity that reversed itself early in the day on Monday leading the start to a potential bullish upturn.

CATTLE HIGHLIGHTS: Cattle markets closed higher today, finding some late week buying to push prices above some nearby technical resistance. Jun lives were up 80 cents to 111.27, Aug lives were up 97 cents to 108.92, and Oct was up 1.00 to 108.90. May feeders were up 30 cents to 134.52, Aug feeders were up 2.17 to 145.50, and Sep feeders were up 2.47 to 146.70. Choice beef values were down a penny yesterday afternoon to 219.56, and were up 15 cents this morning to 219.71. Cash trade today was very quiet, though sales yesterday in KS, TX, and NE were mostly 3.00 to 5.00 lower than last week. Beef production for the week ending May 4 was reported at 535.9 mil pounds, 3.14% ahead of a year ago. Slaughter for that week reached 672,540 head, the highest weekly total since October 1, 2011 at 678,376 head. Much of the buying today was likely due to news that Japan eliminated long staying restrictions on U.S. beef products which should help boost exports. The best traded Aug live cattle contract opened and closed above its 10-day moving average. Today's close above that level was the first since April 22. Aug, the best traded feeder contract also closed above its 10-day moving average for the first time since April 23. Especially with the losses earlier this week, cattle futures were oversold in today's buying appears to be at least somewhat technical in nature.

LEAN HOG HIGHLIGHTS: Hog markets posted moderately positive closes today on some trade optimism and steady cash fundamentals. Jun hogs were up 15 cents to 92.37, Jul hogs were up 60 cents to 93.00, and Aug hogs were up 65 cents to 93.95. The CME lean hog index was up 53 cents to 84.21. Carcass cutout values closed 68 cents lower yesterday afternoon to 86.13, but were up 14 cents this morning to 86.27. China's national average spot pig price was unchanged overnight, and up 11% for the year and up 48% from a year ago. Trade tensions between the U.S., Mexico, and Canada may be easing which could open the door for USMCA ratification down the road. This could provide a big boost of U.S. pork exports, particularly to Mexico. The best traded Jun contract posted its fourth positive close in a row today. Prices found pressure early on, again testing their 10, 20, and 50-day moving average levels, but buyers stepped in to push prices back above those levels. On a weekly chart, Jun closed just below its 10-week moving average to cap off a 2.70 rally for the week.

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