Top Farmer Closing Commentary 12-28-17

CORN HIGHLIGHTS: Corn futures edged lower, losing 1-1/4 to 2 cents as May led today's slide. Trading ranges were again small at 3 to 3-1/2 cents. A lack of positive news, weakness in soybeans and soybean oil and light volume all contributed to today's drift. We are not surprised to see prices on the defensive if funds continue to sell rallies. The 40-day moving average held prices in check for the second day in a row, as Mar futures ran into this overhead resistance level. The 40-day moving average also held prices in check at the first of the month when prices tried to rally. Bottom line, the market is continuing to build a base, and without some type of weather concern out of the Southern Hemisphere, the sideways trend will continue. Be vigilant talking with your grain buyers, as we are beginning to see numerous areas of the country show improved basis. Some of these basis improvements are very short-lived, as end users determined they need a certain amount of corn, raise basis, and once the amount is fulfilled quickly, back away from the market.

SOYBEAN HIGHLIGHTS: Soybean futures finished with losses of 8-1/4 to 10-3/4 cents, as Mar and May futures led today's drop. Nearby Jan closed at 9.45-3/4, down 9-3/4, finishing at its lowest close since late Aug. Expectations for good weather throughout most, if not all Brazil, and increased changes for rain in northern Argentina were enough to sink prices today and yesterday. Jan beans had a high yesterday of 9.64-3/4 but quickly retreated 20 cents from that high on improved weather. Export sales are delayed one day due to the closing of markets Monday. Pre-report estimates suggest sales at 30-45 million.

WHEAT HIGHLIGHTS: Wheat futures had a quiet session with a narrow trading range and finished without much fanfare. Chi Mar closed 1/4 lower at 4.27-3/4, while KC gained 1-1/4 cents on most contracts, as concerns over bitterly cold temperatures mount. Spring wheat closed a couple cents lower, as traders appear to be comfortable taking profit after yesterday's strong gains. News of consequence was lacking. Export sales will be released tomorrow, but we are not anticipating those to have much impact. Much like the corn market, wheat will go into the year a very uneventful market with ample world inventories. Once we cross into the new year, South American weather becomes more critical in view of production. This could suggest that a low for wheat is in place. For now, we are reserved and stay short, anticipating that prices have a tendency to move lower easier than higher.

CATTLE HIGHLIGHTS: Live cattle futures finished with strong gains in Dec, closing 2.52 points higher at 124.55. Feb gained 1.25, closing at 122.25, while deferred months all had gains of 52 to 60 points. Feeder cattle gained 37-50 points. Good demand and firming cutout values provided underlying support, as the market is reflecting good demand over the holiday season. Perhaps just as important is concern that weather remains less than ideal. While many of the feedlots in the Midwest and Plains states are dry and cattle are handling cold weather well, it is still not ideal. Consequently, there will be some weight loss, or at least lack of weight gain. The market seems to be sensing this, as Dec cattle have now picked up over 8.00 since early in the month. We are surprised that Feb has not followed along at a faster pace, or for that matter, Apr. Both are running discount to Dec and are in line with cash. From a longer term perspective, feeders are likely providing a buy opportunity, and we'll take advantage of the recent push lower and signs of a potential recovery and begin buying.

LEAN HOG HIGHLIGHTS: Hog futures continue to look strong with gains of 12-52 points, as Feb led today's rally, closing at 71.55. We were encouraged with today's close but are not sold on the idea that hog futures need to or will move higher. Daily slaughters continue to run large as was evident with today's slaughter of 466,000. This is 23,000 more than a year ago. Cutout values firmed from yesterday for loins, but hams and bellies were lower. We are impressed and encouraged with the ability of hog futures to hang in there despite what appears to be an adequate slaughter number.

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