Stewart-Peterson Market Commentary

Closing Commentary - June 26, 2017

Top Farmer Closing Commentary 6-26-17

CORN HIGHLIGHTS:After five consecutive down sessions, corn futures ended higher today with small gains of 1-1/4 to 2 cents as Mar led today's upturn, closing at 3.77. Nearby Jul closed 1-1/4 higher at 3.59, and new crop Dec up 1-3/4 at 3.77. Too much, too soon? Last week's plunge was not only disappointing, but technically may have damaged charts enough that traders were liquidating. Yet, new crop Dec corn reached a low of 3.74, which tests support from 9/2016, when Dec corn futures bottomed at 3.74-1/2. Dec corn futures also bottomed on 11/15 at 3.74-1/4. Our point, if the market is going to find support it will be at this level. Good weather the last two weeks, as compared to the previous month, and a good forecast for weather through 7/4, would suggest there is little threat to the crop. Most of the Midwest is expecting above normal precipitation, with the exception of the western regions. The temperature outlook also suggests mostly normal or below normal for most of the Midwest. Bottom line, with a forecast of potential moisture and lack of high heat corn prices may have difficulty holding at their current level.

SOYBEAN HIGHLIGHTS:Soybean futures finished with gains of 2-1/4 to 3-1/2 cents. Nov closed 2-3/4 higher at 9.13-3/4, while Jul closed at 9.06-3/4, up 2-1/4. Ideas that last week's sell-off was too much too quick may have provided underlying support, as the market is consolidating near Thursday's close. A relatively friendly weather forecast for production is keeping prices under pressure as the extended outlook through the fourth of July continues to suggest, and the crop could fall further behind. While we don't doubt this could be the case, we also have to assume the recent cold spell will likely be short-lived. Soybean meal finished 50-90 cents higher, and soybean oil finished with small losses of 7-9 cents.

WHEAT HIGHLIGHTS:Export inspections of 23.1 million bushels were termed supportive, but this failed to provide underlying support for wheat, as prices tumbled in Chi and KC, while Mpls finished with gains of 2-4 cents. By day's end, Jul KC closed 11-1/4 lower at 4.53, and Jul Chi was down 9-3/4 at 4.50. Harvest pressure and what appears to be good weather for maturity and for combines to roll is keeping near term pressure on wheat prices. A cooler than usual forecast suggests there is little threat to drying out wheat too soon. From a larger perspective, wheat prices consolidated nicely on all three exchanges and appear to have found a longer term low. We are not surprised to see a pullback after strong gains into the early part of last week. KC and Chi, however, continue to be followers of Mpls, in which expectations are for lower crop ratings.

CATTLE HIGHLIGHTS:Cattle futures closed sharply higher today, after a less-than-supportive Cattle on Feed report Friday and a mostly bearish supply outlook. The nearby Jun live cattle futures closed 2.27 higher to 121.47, Aug closed limit up 3.00 higher to 118.27, and Oct closed 2.85 higher to 215.27. The three-near-month feeder contracts; Aug, Sep, and Oct all closed 4.50 limit higher to 149.45, 148.90, and 147.20 respectively. On Friday, Cattle on Feed results were as follows: Placements at 112.2% versus estimates of 110.4%, Marketings at 108.8% versus estimates of 108.5%, and on feed at 102.7% versus estimates of 102.4%. These results were all within the range of trade estimates, and thus were likely priced in by the end of Friday's session. At the end of the last week, choice cuts closed 3.13 lower to 239.75 and select down 20 cents to 216.72. At midday today, choice cuts were up 3 cents to 239.78 and select cuts were up 2.08 to 218.80. The partial recovery in beef prices is likely due to last minute retail bookings for the 4th of July holiday. Last minute buying before next week was likely responsible for much of the movement higher today. Buying technical basis, cattle markets were looking at little oversold. Both live and feeder cattle markets tomorrow will have expanded limits due to limit higher finishes today.

LEAN HOG HIGHLIGHTS:Hog futures closed with moderate gains today, as pork values continue to appreciate. The nearby Jul contract closed 1.72 higher to 87.02, Aug closed 2 cents higher to 78.67, and Oct closed 17 cents higher to 68.37. Buying interest in the hog markets was likely responsible for some of the buying in cattle markets today, and vice-versa. On Friday, carcass cutouts closed 1.63 higher to 101.15 and were up another 12 cents at midday to 101.27. This is the highest carcass cutout value since 10/2014, following the PED virus outbreak. Cash bellies were up 1.65 to 189.55 at midday, up almost 9.00 from last Monday. Today's close for the Jul close was a new high, but the Aug and Oct contracts exhibited more of a consolidation-type price action today. Those contracts were unable to close above their nearest resistance levels at the 10 and 20-day moving average levels.

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