Stewart-Peterson Market Commentary

Closing Commentary - October 18, 2017

Top Farmer Closing Commentary 10-18-17

CORN HIGHLIGHTS:Corn futures edged lower for the third consecutive session, finishing with losses of 3/4 to 1-1/2 cents. Nearby Dec led the way lower, closing at 3.48-1/2. While today's trade means little from a technical perspective, another disappointing close suggests that some of the buying enthusiasm from last week may have left the market. Good harvest weather for the Midwest is helping to provide pressure to prices. Yet, we're hearing from many producers who are disappointed that their corn doesn't appear to be drying down at a fast enough pace to allow for rapid harvest progress. Bottom line, it will be a long fall for many, especially in the northern Midwest. As for yield potential, we continue to hear good results, with most farmers suggesting that yield is as, or better than, expected. This should help to solidify the idea of a 170+ bushel crop, if this trend continues. Yet, with harvest behind schedule, and a chance that the central and northern Midwest may have disappointing yields due to dry weather in August and September, it could have impact on overall yield results. Nonetheless, it will take strong demand and continued lack of farmer selling to keep prices in a sideways pattern. Both are likely.

SOYBEAN HIGHLIGHTS:Soybean futures finished quietly, losing a 1/4 to 1/2 cent, as Nov led today's small losses closing at 9.84-1/4. Beans have closed lower three consecutive sessions, but when looking at charts after a strong rally last week Thursday and Friday, the downturn so far this week appears to be little more than a correction. Improved harvest weather is likely the rationale behind bean prices slipping, as is an increase in farmer selling. Our bias is that prices may move lower easier than higher this week due to harvest, but good demand continues to underpin prices. Both the immediate and 6-10 day forecasts suggest mostly good harvest weather, and this should allow the majority of the crop to be harvested by the end of next week. Through Sunday of this past week, near 50% was harvested. Traders were buying meal and selling oil today, in an otherwise quiet market. We continue to see good demand from meal as record production of protein products is needed to meet the growing demand of increased dairy, poultry, and livestock herds.

WHEAT HIGHLIGHTS:Wheat futures finished with losses of 3-1/2 to 4-1/2 cents in Chi, a nickel in KC, and 1 cent in Mpls. Lack of new positive news, and traders shedding long positions seem to be enough to keep pressure on prices today. Wheat prices have struggled with this month's Supply/Demand report continuing to suggest ample world inventories, and somewhat surprising negative on the projected world carryout. Thoughts that 2018 planted acres may be even less than 2017, could offer some support, as well as some concerns with the Brazil crop. Yet, the market doesn't seem to have much care or concern at this point. Unfortunately, with big inventory this is not unusual. The market needs to chop through supply until something comes along to act as a catalyst.

CATTLE HIGHLIGHTS:Cattle futures closed moderately higher today, finding some technical support on an early session sell-off, as well as gaining on expectations for strong demand this week. The nearby Oct contract closed 30 cents higher to 111.47, Dec closed 67 cents higher to 116.65, and Feb closed 40 cents higher to 120.55. Prices early in the session sold off quite heavily after yesterday's bearish technical trading session. Prices were soft until results from today's Fed Cattle Exchange were noted. Of the 768 head offered for sale for 1-9 day delivery, 230 head were sold for a weighted average price of 109.00. This was slightly higher than last week's Fed Cattle Exchange numbers, and some feel that cash could push through 111.00 this week based on auction results. Choice cuts closed 1.15 lower yesterday afternoon to 197.66, but rebounded 23 cents by mid-session today to 197.89. Spillover buying interest from the hog markets was also supportive today. The market was also anticipating strong export sales numbers for tomorrow. The nearby Oct contract traded sharply lower this morning to touch its 200-day moving average level, but then pushed higher, through its 20-day moving average to close just below strong resistance at the 10 and 100-day moving average levels. The Dec contract showed similar price action, trading down to its 100-day moving average support level, then closing above its 20-day moving average and just below its 10-day moving average.

LEAN HOG HIGHLIGHTS:Hog futures bounced back from yesterday's losses, finding buying interest on expectations of bullish export activity. The nearby Dec contract closed 1.57 higher to 63.75, Feb closed 85 cents higher to 68.00, and Apr closed 60 cents higher to 71.90. Carcass cutouts were 84 cents lower on the day to 73.97, still higher than last week's carcass cutout value of 73.25. This stabilization in pork values has been a major source of fundamental support. Average weights for IA/MN hogs for the week ending Saturday, October 14 were very slightly lower from the previous week, yet another supportive force. This current consolidation level still leaves prices in short-term overbought territory. Prices will likely have trouble moving much higher, especially past yesterday's highs.

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