Top Farmer Closing Commentary 3-12-18

CORN HIGHLIGHTS: Corn futures had a quiet trading session with prices range-bound, yet managed to claw into positive territory at day's end with Mar gaining 1-1/4 cents closing at 3.84-1/4 and new crop Dec gaining 1/2 closing at 4.07-3/4. Generally dry conditions in Argentina continue to provide underlying support, though there are increased chances of rain in the weekend outlook. Solid export inspections of over 54 million bushels were termed supportive for the week, but by some accounts still lagging behind last year's pace, and below USDA estimates. Nonetheless, we'll take one victory at a time, and we believe this number was solid. The negative turnaround in the stock market, after strong gains early in the session, might suggest that there's still volatility and uncertainty. It also suggests that money could head for the sidelines from the equities, which by many accounts are viewed as overvalued, and head toward value commodities, such as corn.

SOYBEAN HIGHLIGHTS: Soybean futures finished with gains of 1-3/4 in May to 6 in Nov, as bear spreading was once again noted. However, what was different today was that the trade was buying new crop, more so aggressively than old crop. Traders were also unwinding meal/oil spreads, with meal losing anywhere from 1.00 to 3.00, while oil turned positive, finishing 14 to 17 points higher. A turnaround in the stock market may have been enough to help generate some cash flow into the commodity markets, with beans the recipient. Weekend rains in Argentina were noted, but they were generally light in nature. There's not much rain on tap for the early part of this week, but forecasters are giving significant chances of rain toward the end of the week, as two fronts move through drier regions of Argentina. Point, this is getting to be a very critical window of time, and if rain falls it may help salvage the crop in areas, as well as produce high yield in others. If rainfall totals fail this weekend, it might be likelier to pencil in additional crop damage, even more so than what was regarded on the last USDA report. Inspections at 33.4 million were termed supportive, but the general pace just isn't strong enough to ignite too much bullish enthusiasm at this time.

WHEAT HIGHLIGHTS: Wheat futures had a quiet session, edging higher with gains of 3/4 to 2 cents in Chi, as Jul led today's recovery. KC closed with gains of 1 to 2-1/2, and Mpls, the bigger winner today, with gains of 6 to 10-1/2 cents. Mar led today's rally in Mpls wheat on generally light volume. Nonetheless, Mpls had a good day today, as compared to general weakness the last 2 sessions. The inability for Mpls to soften, may have had traders on the offensive, buying back hedges today, as uncertainty with the spring planting season looms larger. Generally dry conditions in the Dakotas may not mean much at this time, with poor salt and drought-type conditions carrying over from last year. Also, the recent recovery in corn and bean prices might suggest farmers could move out of spring wheat and plant more corn and beans. Whatever the case, look for wheat prices to continue to be choppy. Our bias is last week's USDA report indicated little reason to be optimistic of bean prices moving higher in the near-term. Yet, weather in the Plains is a supported factor.

CATTLE HIGHLIGHTS: Cattle futures began the week with negative closes, as beef production outlook continues to weigh on prices. The nearby Apr futures closed 1.57 lower to 121.55, Jun closed 1.02 lower to 113.27, and Aug closed 82 cents lower to 110.82. Retail beef demand continues to bolster cutout values, in turn supporting futures markets. On Friday afternoon, choice cuts closed 26 cents higher to 224.14, and select cuts closed 48 cents higher to 217.26. Choice cuts were up another 9 cents at midday today to 224.23, and select cuts were up 20 cents to 217.46. These values are the highest since late June. The USDA is currently projecting an increase in beef production of 745 million pounds from Q1 to Q2. This would be a record increase from Q1 to Q2 and a record amount of beef production in any quarter at a total of 7.225 billion pounds. Apr cattle are currently trading at a discount of around 5.00 to the cash market. This should limit futures downside until the cash market starts to break. The triple-digit gains in nearby contracts today was by no means bullish, but no major technical damage was done today. The Apr contract put in an inside trading session, and was unable to hold its opening price above the 10-day moving average level. Jun futures held their 200-day moving average nicely, also putting in an inside trading session.

LEAN HOG HIGHLIGHTS: Hog markets sagged lower again today, though were able to rebound from heavy losses early in the session. The nearby Apr contract closed 17 cents lower to 67.67, May closed 77 cents lower to 71.22, and Jun closed 62 cents lower to 77.05. The CME Lean Hog Index was 12 cents lower to 67.52. Traders are looking for cash hogs to continue lower, after falling 1.00 on Friday. Carcass cutouts closed 44 cents higher on Friday afternoon to 73.43, and were up another 60 cents this morning to 74.03. Ribs and hams led the way higher today, up 3.16 and 3.25, respectively. Bellies were flat on the day at 100.92. Cash bellies lost about 24.00 in value just last week. The Apr contract traded today as low as 66.52, unable to close the late August gap, yet again. Prices will need to reach 66.35 in order to close that gap. The Apr contract was able to close higher than its opening price, so despite the lower close, the technical picture was not all negative. Prices appear to be consolidating and are oversold, so a bounce could be on the way.

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