Stewart-Peterson Market Commentary

Closing Commentary - March 22, 2019

Top Farmer Closing Commentary 3-22-19

CORN HIGHLIGHTS: Corn futures finished with slight gains today as contracts were 1-2 cents higher. Front month Mar corn was up 2 cents to 3.78-1/4, followed by Jul up 2 cents to 3.87-1/2. New crop Dec corn finished 1-1/4 cents higher at 4.00 in today's trade. For the week, today's close brought gains to the corn market with the May contract finished 5 cents higher than last week's levels. The corn market is still holding a large short managed position and saw an additional amount of short covering with follow through on yesterday's positive trade. An improved technical picture, as well as demand news, helped move some short sellers to the sidelines this afternoon. Dec corn traded back to the 4.00 level, and closed today above the 100-day moving average for the first time since breaking through it on February 25. After weeks of rumors, Chinese demand news became reality as China purchased 11.8 mil bu of U.S. corn for 2018/19 crop year. It's not a large purchase, and now the question is could this be the start of additional or just a token purchase as trade negotiations resume in earnest again next week. Next week will also bring a large amount of volatility as we move toward next Friday's USDA acre intentions and grains stocks numbers.

SOYBEAN HIGHLIGHTS: Soybean futures saw the pressure in grain markets today as contracts were down 6 to 9 cents. Front month May beans were down 6-3/4 to 9.03-3/4, while Nov beans were down 7-1/4 to 9.37-1/2. For the week, soybean futures were down 5-1/2 cents in May, while the Nov contract lost 5 cents. It was a disappointing week for the bean market, but prices still posted today high on the weekly level and maintained last week's weekly reversal on the charts. Regardless, news was quiet this week and selling pressure in the soybean oil market made it difficult for bean futures to gain much traction today. Front month soybean oil markets dropped with strong losses posting their lowest level since January in today's close. The lack of news, as well as demand concerns as weekly export sales were lackluster and kept the fundamental picture on beans bearish, mades it difficult for prices to rally. With projected carryouts still at record levels, there will be more volatile news as U.S/Chinese trade negotiations will resume at the end of the week, and the market will be positioning for next Friday's grain Stocks and Intentions report. Currently, managed money is holding relatively large short positions for this time of year, and prices may see some correction as positions square before next Friday's report.

WHEAT HIGHLIGHTS: Wheat futures saw quiet two-sided trade before prices finished with mild losses in today's trade. Front month May Chi wheat futures are down 1/2 of a cent to 4.66, while Jul was 3/4 of a cent lower to 4.70-3/4. KC hard red winter wheat saw 1-2 cent losses with the May contract down 2 cents to 4.45, and spring wheat futures saw mixed trade with the May contract 1 cent higher to 5.72-1/4. For the week, the Chi may contract gained 3-3/4 cents on a relatively quiet trading week. An improved technical picture with last week's reversal, then some additional light follow through this week, may be enough to keep short sellers nervous and bring some additional short covering into next week's trade. With wheat futures inability to hold positive gains nearly 3 to 4 cents higher during yesterday's trade was disappointing given the current trend. The Plains weather is going to be closely watched in the weeks ahead as hard red winter wheat is starting to come out of dormancy and early crop conditions look mostly favorable with more than ample moisture, but we'll need warmer temperatures. The focus may be the spring wheat crop planted in the northern Plains; there may be planting delays as snow cover continues to recede and soils are extremely wet. Demand will stay as the focus on traders’ minds next week as U.S. wheat demand continues to lack expected paces to move closer to the end of the marketing year. Next week's grain stocks numbers will likely confirm ample supplies of wheat which may be difficult or may weigh heavy on prices.

CATTLE HIGHLIGHTS: Cattle futures ended the day with mixed closes, with Apr lives down 17 cents to 129.72, Jun lives down 40 cents to 123.50, and Aug lives were up 5 cents to 120.02. Apr feeders were down 12 cents to 148.80 and May feeders were up 5 cents to 154.05. Choice beef values closed 64 cents higher yesterday afternoon to 229.31 but were down 15 cents this morning to 229.16. According to the USDA Comprehensive Fed Cattle Weekly report, steer carcasses lost 2.2 pounds this week, down to 841.5. This is 18 pounds lower from a year ago and shows the effects of not only a difficult winter, but also a very wet and stressful beginning to spring. This afternoon's Cattle on Feed report was deemed bearish. Marketings came in at 100%, in line with estimates, placements came in at 102% vs the average estimate of 96% and the high-end estimate of 101.5%, and on feed was reported at 101% vs the average market estimate of 99.7% and the high-end range of estimates of 100.6%. Technically, live cattle have been overbought for much of the week. Today price action left prices in a more sustainable level, but the best traded live cattle contract did make a bearish key reversal. A very choppy session in the hog market was also unable to provide much outside market support today.

LEAN HOG HIGHLIGHTS: Hog markets had a very volatile and choppy session today filled with new buying and profit taking. Apr hogs closed steady at 78.32, Jun hogs were up 92 cents to 95.67, and Jul hogs were up 1.00 to 98.57. Carcass cutout values closed 2.20 higher yesterday afternoon to 76.25, their highest value since October 30. Pork values jumped another 1.02 this morning to 77.27. While there were no new developments today as far as the African swine fever spread in Asia, rumors continue to circulate about just how many hogs have been destroyed. Some estimates are as high as 30% of China's hogs have been destroyed. For context, 30% of China's hog population is greater than the combined hog herds of Canada, the U.S., Mexico, and Brazil. China's purchases of U.S. corn this morning is a good sign for U.S./China trade negotiations. If a trade deal is done, we can expect China to step up purchases of U.S. pork very quickly. Technically, the best-traded Jun contract traded within a range today of 6.80. There was likely some profit taking from traders who were long for the entire week, and maybe some traders trying to pick the top. The only certainty is that volatility will remain extremely high.




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