Stewart-Peterson Market Commentary

Closing Commentary - February 22, 2019

Top Farmer Closing Commentary 2-22-19

CORN HIGHLIGHTS: Corn futures finished the week quietly, with Mar losing 1/4 cent, closing at 3.75-1/4 and Dec unchanged at 4.01-3/4 in range-bound trade. Most futures contracts had a range of 3 cents or less. For the week, Mar corn gained 1/2 cent, and new crop Dec gained 2-1/2 cents. After a weak start to the week, prices rebounded with good strength yesterday and solid gains early in the session, but gave way to end of day and week trading, finishing mostly steady, which means they have up gains from earlier in the session. That is not untypical this winter with the corn market finished off the daily highs. Overhead resistance on a downward channel line kept prices in check, as did the 21, 40 and 50-day moving averages. For the second consecutive session, prices managed to stay underneath these key resistance points. Today was a big day for export sales, which combined multiple weeks. Today's number came in at 238.4 million bushels, which hardly moved the needle for prices once these figures were released. Year-to-date export sales are 1.509 billion, which compares to the previous year of 1.478.

SOYBEAN HIGHLIGHTS: Soybean futures finished mixed; nearby Mar lost 3/4 cent, closing at 9.10, and Nov was up 1/4 at 9.54-1/2. For the week, Mar beans gained 2-3/4 cents, and new crop Nov gained 2-1/2 cents. After a rough start to the week, prices rebounded, closing back above moving averages as well as the upward channel line that was intact prior to the beginning of the week. Therefore, the close of this week negates the close under the channel line. Support also came into play this week at the 100-day moving average, which acted as a stopping point for selling pressure on both Tuesday and Wednesday. Multiple weeks of export sales were released today, with total figures at 240 million, which brings year-to-date sales up to 1.356 billion. This compares to 1.640 billion year ago. Positive expectations from talks with China seem to be the primary catalyst to recovery late in the week. As an overall summary, we would argue that the southern Hemisphere continues to be conducive for crop production as compared to a month ago when dry weather did hurt some of the Brazilian production. Most private estimates have Brazil production closer to 115 million metric tons versus the 117 from the USDA.

WHEAT HIGHLIGHTS: Wheat futures ended the day with small gains in Chi of 1/4 to 1-1/2 cents. KC gained 1/2 to 3-1/4 cents, and Mpls gained 7-9. Mpls may have found support on more wet snow in the forecast, which could begin to suggest ideas of a late plant. We doubt this was the case, as light volume and short covering were likely the bigger features today. Ideas of oversold conditions helped provide underlying support. Multiple weeks of export sales were released with today's figure, a combined 131.4 million bushels. This puts year-to-date sales at 789.4 million, in line with last year's 787.9 at this same time. Today's export figures were termed neutral or uneventful. Pressure on prices early in the week came from traders unraveling long wheat / short corn and short bean spreads. In addition, it is likely that traders who had been buying wheat for several months began to exit in earnest once prices broke through support. Prices did bounce back late in the week, and while we would not call this a victory, weekly closes were not all that devastating. For the week, Mar Chi wheat lost 17-1/2 cents. Mar KC lost 18-1/2, while Mar Mpls lost near 8 cents. Perhaps the biggest news was the technical sell-off on a lack of new favorable news. Export business has not picked up to date, and the market eventually came under selling pressure.

CATTLE HIGHLIGHTS: Cattle futures were mixed today with live cattle extending their rally, and feeder cattle staying within their recent range. The Feb live cattle contract closed 1.05 higher to 128.67, Apr closed 27 cents higher to 128.87, and Jun closed 22 cents higher to 119.47. Mar feeders were down 32 cents to 142.90, and Apr feeders were down 22 cents to 145.30. Choice beef values were up 158 yesterday afternoon to 218.07. This is their highest value since 1/29. Choice beef was up another 1.32 this morning to 219.39. As of yesterday afternoon, weekly slaughter was running about 23,000 head behind last week and 8,000 behind the same week last year. This limits available beef supply and keeps retail value supported. Kansas and Nebraska will be dealing with high winds and lots of snow this weekend, which should limit weight gain for cattle. This afternoon's Cattle on Feed report was considered mostly neutral. Marketings in December were reported at 99% versus the average estimate of 99.7%, placements were reported at 98% versus the average estimate of 101.4% and on feed was reported at 102% versus the average estimate of 102.2%. Cash trade so far this week has been quiet, but given today's strength in retail and futures values, the market is expecting steady to higher than last week. The Feb live cattle contract made new highs again today, and the Apr contract stayed within yesterday's price range. The 10-day moving average is still the first support level. Mar feeders made an inside session and an inside week.

LEAN HOG HIGHLIGHTS: Hog futures closed mixed to mostly higher today in quiet trade after a week of extreme volatility. Apr hogs were down 50 cents to 55.45, Jun hogs were up 22 cents to 75.90, and Jul hogs were up 20 cents to 78.50. The CME lean hog index was down 7 cents to 54.06. Carcass cutout values jumped 1.06 yesterday afternoon to 61.23 and were down 2 cents this morning to 61.21. Recent slaughter has been running 5 to 7% ahead of last year's record level highs, keeping domestic pork prices under pressure. However, some talk has surfaced that some of this increase could have included some breeding stock slaughter, which would be a positive factor longer term. Snowy conditions in Minnesota and Iowa could slow chain speed as well. Solid progress with U.S. / China trade negotiations this week would be a major positive if China tariffs on U.S. pork products come down. Technically, today's price action was relatively quiet. Jun futures closed just below their 20-day moving average resistance level after trading over 50 cents above it earlier in the day. The Apr contract suffered losses this week of 4.07, Jun was down 82 cents on the week, and Jul was down 1.52.

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