Stewart-Peterson Market Commentary

Closing Commentary - September 23, 2019

Top Farmer Closing Commentary 9-23-19

CORN HIGHLIGHTS: Corn futures edged higher today gaining 1-1/4 to 2-1/2 cents. Dec closed 2-1/2 higher at 3.73-1/4, while Dec 20 closed 1-1/2 higher at 4.03-1/2. Dec 20 catches our attention because that particular market has been range bound for some time. Yet, now that harvest is upon us, we need to start looking out much further in advance. Rallies from this point onward should be viewed as opportunities to begin shifting risk. Make sure and follow recommendations and read the report. As for old crop, there wasn’t a whole lot of new news other than another bout of heavy wet weather forecasted for much of the Midwest which will slow harvest. Yield results to date continue to be mixed. Export inspections were a disappointment at 9.2 million bushels. This, however, is not a surprise as export sales in the weeks prior were generally poor. Last week’s strong export sales number will likely lead to stronger inspections in the weeks ahead. Charts over the last week are not telling us a lot since Dec corn’s close today at 3.74-1/2 is in line with where prices were a week ago with a close at 3.74.

SOYBEAN HIGHLIGHTS: Soybean futures had supportive news on two fronts, and possibly a third. A wet forecast should be providing underlying support and looked as though it is. More importantly, export activity was encouraging today with it being reported that China importers bought about 600,000 ton of beans for October thru December shipment. That’s the equivalent of near 22 million bushels. Export inspections at 33.9 million bushels were viewed as supportive and above the 34.6 million needed a weekly pace to meet the USDA estimate of 1.775 billion bushels. Attention will now focus on weather from two fronts, both Northern and Southern Hemispheres. Drier conditions in parts of Argentina and Brazil are beginning to make the radar in a more important fashion. Yet, we continue to caution against buying into too much weather concerned in September or even October. Late November and December is more critical. Weather here in the U.S. could be critical as the forecasters today seem to be putting in another bout of heavy rain showers with the above normal expectations for rainfall totals in the U.S. That could delay harvest. At this time, however, we do not see a frost in the near-term forecast for the next 10 days. Again, we’ll argue to hold your close-only order against short Nov beans and let the market dictate whether we’ll continue to hold a hedge or exit.

WHEAT HIGHLIGHTS: Wheat futures finished mixed with both Chi and KC suffering losses of 1 to 2-3/4 cents, while Mpls gained 9-1/2 to 13 cents. Growing concerns of harvest delays and wheat that may not be harvested at all both in the northern regions of the U.S. and Canada prompted underlying buying support for spring wheat. Futures finished higher for the fourth-consecutive session and at their highest close since late July. Mpls Dec wheat futures traded up to a 50% retracement of the high established on June 12 to the recent low established on September 3. New news effecting both the hard and soft red winter wheats were lacking and consequently prices drifted. Export inspections at 17.5 million bushels were termed neutral to slightly negative. Yet, year to date inspections at just under 300 million bushels are running more than 20% ahead of a year ago at the same time.

CATTLE HIGHLIGHTS: Cattle markets began the week with triple-digit gains, with Oct lives up 2.50 to 101.85, Dec lives were up 2.62 to 107.77, and Feb lives were up 2.02 to 114.10. Sep feeders were up 1.27 to 141.60, Oct feeders were up 2.05 to 141.25, and Nov feeders were up 2.70 to 139.72. Choice beef was down 1.20 at Friday’s close to 216.97, its lowest value since August 9. Choice beef was down another 14 cents this morning to 216.83. Cash cattle traded between $100 and $200 on Friday, steady to $1 higher than the previous week. The biggest supportive factor today was no doubt Friday’s Cattle on Feed report. Placements came in at 91% vs the average market guess at 94.1%, marketings were reported at 98% vs the average estimate of 98.3% and on feed came in at 99% vs the average guess of 99.3%. This is the first time cattle supply was smaller than a year ago since December 2016. Average steer weights have been lighter than usual, and this contributed to a drop in beef production last week of 0.8% from last year. Dec cattle gapped higher today and ended up closing directly at their 50-day moving average resistance level. Dec cattle have not closed above their 50-day moving average level since August 5, or before the Tyson plant in KS burnt down. Oct feeders also gapped higher today, making their highest close since August 1. This afternoon’s Cold Storage report showed beef stocks up 4% from last month, but down about 6% from last year. The market was expecting smaller beef stocks with kill down and cheap boxed beef prices in August. This will likely weigh on markets tomorrow.

LEAN HOG HIGHLIGHTS: Hog markets posted a solid start to the week, with Oct up 60 cents to 60.95, Dec hogs were up 2.12 to 68.37, and Feb hogs were up 1.22 to 75.12. The CME Lean Hog Index was down 52 cents to 55.80. This was its lowest value since March 18, but the downtrend does appear to be slowing down quickly. China’s Spot Pig Index continues to rally, and is up 5.88% for the month and up 113% year to date. China imports for the month of August were up 76% from last year but down about 11% from July. Year to date imports are up 40.4%. Carcass cutout values were up 13 cents at Friday’s close to 69.15 and were up 1.11 today to 70.26. Both the U.S. and China labeled last week’s trade talks as constructive despite China’s early departure home. It remains to be seen just how constructive these talks were? But high level talks are still scheduled for October. The best traded Dec contract tested nearby support today at its 50-day moving average level and then rallied to close near the highs. Oct hogs will likely have a more difficult time rallying unless the cash index can turn around. This afternoon’s Cold Storage report showed frozen pork stocks were down 1% from last month but up about 4% from last year. This is negative, though not excessively so.

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