News Source: SPC
Top Farmer Closing Commentary 11-19-19
CORN HIGHLIGHTS: After two consecutive weak finishes, corn prices made a turnaround today finishing with gains of 2-1/4 in Dec closing at 3.70 to 3-3/4 higher in May closing at 3.86-3/4. Dec 2020 closed 2-1/2 higher at 3.96. A lack of positive news has plagued the corn market over the last month as harvest continues to drag on slowly pressuring prices. A 3-day drop in the U.S. dollar may have provided some underlying support, as did another day of firmer wheat prices. We believe farmers’ selling is minimal and this too is providing underlying support. Yet, there is a lack of new positive news and the market is taking on a more of a holiday-type mindset with small trading ranges and prices failing to hold onto gains from earlier in the day. Today was that scenario again as Dec corn reached a high at 3.73, finishing 3 cents from this level. Prices got a boost thig morning when an announcement of 191,000 mt of corn sold to unknown destinations. While this isn’t a big amount, it was still positive and helped create short covering. Margins for ethanol producers seem to be stabilizing as well and this too was viewed as longer term supportive.
SOYBEAN HIGHLIGHTS: Soybean futures edged higher today in a rather rangebound and quiet session. Nearby Jan gained 1.25 cents closing at 9.11-1/2, while deferred Nov closed 3 higher at 9.49-3/4. There wasn’t a whole lot of news for the market to find traction from and that’s how prices traded. The bullish traders will argue that the market is oversold and today showed some stability. On the other hand, prices finished well off their high for the day by 5 or more cents in a tight trading range. Like yesterday, the market couldn’t hold onto gains from earlier in the session. The 100-day moving average is holding for support in Jan beans. A lack of new news on the export front, good weather in South America, and a difficult looking technical picture are keeping the market on edge. Bullish traders will argue that demand will pick up from here as South America could be likely tapped out of exportable product soon and if in fact there is an agreement between the U.S. and China, the market is poised to make a fast short cover rally, if not move into an uptrend. We agree with this assessment. Yet, at the same time, markets generally need positive news to move higher and those key elements we just mentioned are still missing.
WHEAT HIGHLIGHTS: Wheat futures again flexed their muscle today showing solid gains throughout the session and holding into the close. By day’s end, Chi finished 3-1/2 to 4-3/4 higher with Dec leading today’s charge closing at 5.12, while Dec KC closed up 7-1/4 at 4.25-3/4 and Mpls unchanged in Dec closing at 5.03-1/4. After posting an outside reversal yesterday in which prices traded in a range larger than the previous day and closed higher, the market followed through today. The 21-day moving average acted as resistance on Dec Chi. Prices are having a tough time being pressured. A lack of farmers’ selling and the continued presence of dry weather in Australia and expectations for a downgrade to world production are providing underlying support. The U.S. dollar dropped three days in a row and recovered slightly today, but its recent turndown has been viewed as supportive as well.
CATTLE HIGHLIGHTS: Cattle markets posted mixed to mostly lower closes today with Dec lives up 7 cents to 118.77, Feb lives were down 5 cents to 125.05, and Apr lives were down 22 cents to 126.17. Nov feeders were up 22 cents to 146.60 and Jan feeders were down 45 cents to 144.02. Choice beef values were down 1.68 at yesterday’s close to 239.12, but bounced 83 cents this morning to 239.95. A generally lower to choppy trend in beef values is likely to pressure the cash market this week. The Tyson plant that burned down a few months ago is expected to reopen the first month of December which could increase beef supplies, but also increase demand for slaughter supplies. Dec live cattle tested their 20-day moving average support level today, but were able to rally back and close above it. Feb lives were able to hold onto their 10-day moving average level by the close and Apr lives closed directly on the 10-day moving average level. Jan feeders staged a rally into the close, but were unable to close above their 20-day moving average level.
LEAN HOG HIGHLIGHTS: Hog markets were lower today, though the deferred contract staged impressive late session rallies to limit losses significantly. Dec, Feb, and Apr hogs all were down 60 cents by the day’s end with Dec finishing at 62.15, Feb at 69.62, and Apr at 75.75. The CME lean hog index was down 27 cents to 59.24. Carcass cutout values were up 1.01 at yesterday’s close to 89.14 and were up another 85 cents this morning to 89.99. The rally in pork values was very impressive considering near record pork production lately. Not only was last week’s slaughter an all time record, but weights are also extremely heavy. Headlines regarding trade negotiations were quiet today in limited speculative interests. The Dec contract closed near the day’s lows, but the Feb and Apr contracts found impressive late session buying. Feb traded as low today as 68.00 and closed 1.62 off the lows, while the Apr contract closed 1.70 off of the session lows. This again shows that speculators are unwilling to push hog markets out of recent ranges ahead of potential progress with China.
Top Farmer Midday Update 11-15-19
Corn futures are trading slightly lower today, with Dec down 2-1/2 to 3.73-1/4, Mar is down 2-1/4 to 3.82-1/2, and May is down 2-1/4 to 3.88-1/2. Ethanol production for the week ending November 8 was seen as positive, up 1.6% vs last week but down 3.5% vs last year. Ethanol stocks were down 4.1% from last week and down 10.7% from last year. Bullish traders have focused on increasing ethanol margin as well as better than expected feed usage due to heavy cattle placements, heavy dressed steer weights, and near-record hog weights. Bearish traders have focused on a slow export pace and improving South American weather. The U.S. shipped 582,000 tons of corn for the week ending November 7, within expectations. Dec corn briefly tested its 10-day moving average resistance level this morning but has since fallen back lower and is now trading on the lows of the day. Corn futures are still within last Friday’s range, and a break below will likely trigger more selling action. Speculative funds were thought to have bought about 2,000 contracts of corn yesterday.
Soybean futures are slightly higher this morning, with Jan up 3-1/2 cents to 9.20-1/4, Mar beans are up 3-3/4 to 9.33-1/4, and May beans are up 3-1/2 to 9.44-3/4. The U.S./China trade negotiations seem to be slowing down a bit with discussions around just how much China plans to spend on U.S. ag goods. However, the general tone is positive and China did make a major purchase of U.S. beans yesterday. There are reports that China is experiencing delays in the unloading at Chinese ports with about 1.8 million tons apparently being held up in ports currently. South American weather appears to be improving greatly, with above-normal precipitation expected for Argentina and Brazil over the next 6-10 days. Jan soybeans held their 100-day moving average support level yesterday as well as the 50% retracement of their Septemeber to October rally. There is still a bearish head-and-shoulders formation on the charts, but buying off of yesterday’s lows may signal that a short-term low is in. Prices have tested but have been unable to break through their 50-day moving average resistance levels today. The U.S. sold 1.25 million tons of beans for the week ending November 7, coming in near the high end of market estimates. Speculative funds were thought to have bought about 3,000 contracts of soybeans yesterday.
Wheat markets are drifting lower this morning, with Dec Chi wheat down 2-1/4 to 5.05-1/2, Dec KC wheat is down 1-3/4 to 4.20-1/2, and Dec Mpls wheat is down 3 cents to 5.09-3/4. Egypt bought wheat yesterday from Russia and Ukraine though at a lower price than last week’s tender. Argentina also reduced their production estimates yesterday but this did not attract much buying interest. Weather forecasts for KC wheat-growing areas are getting better which is keeping the pressure on the hard red wheat despite being very cheap. Dec Chi wheat is drifting towards the low end of its recent consolidation levels, coming within a 1/4 cent of Monday’s low. Dec KC wheat briefly tested its 20-day moving average resistance level but has fallen back and stayed within a very quiet range and Dec spring wheat is making new lows for the move, still falling deeper into oversold territory. The U.S. sold about 239,000 tons of wheat for the week ending November 7, near the lower end of trade of estimates. Speculative funds were thought to have sold about 3,000 contracts of Chi wheat yesterday.
Cattle markets are mixed to mostly lower this morning, with Dec lives down 25 cents to 118.82, Feb lives were down 17 cents to 124.75, and Apr lives were down 20 cents to 125.90. Nov feeders were down 42 cents to 146.20 and Jan feeders were up 32 cents to 144.37. Cash cattle trade has begun to creep higher this week, but only by 50 cents or so. Beef values closed lower yesterday and may be signaling a top soon. Both the live and feeder cattle markets are sharply overbought and momentum indicators appear to be turning lower. Dec lives retested overhead resistance on yesterday’s bounce but cannot close above it. Trade has been two-sided today, and if prices cannot breach the 10-day moving average resistance level, a significant top is likely in place. Jan feeders are moderately higher after testing some nearby support.
Hog markets are lower this morning, with Dec down 15 cents to 62.60, Feb hogs are down 1.77 to 71.60, and Apr hogs are down 2.05 to 78.25. Pork values may have turned lower and the CME Lean Hog Index is still choppy which should keep rallies in the front-month contract in check. There is some reports of a hiccup in the U.S./China trade negotiations but the overall tone is still very positive. Nearly record hog weights have kept production high. Especially given slaughter has been up 3% to 4% from last year so far this week. Dec, Feb, and Apr hogs are all making a move towards the low end of recent ranges despite recent strength. This is disappointing, especially in the deferred contracts.
Top Farmer Closing Commentary
CORN HIGHLIGHTS: Corn futures were unable to hold onto much strength today, with Dec down 2-1/2 cents to 3.75-1/4. Mar corn was down 2-1/2 to 3.84, and May corn was down 3 cents to 3.89-3/4. Yesterday afternoon’s Crop Progress report was supportive today but unable to stir up much buyer interest. The corn is 66% harvested as of Sunday afternoon, versus the average market guess of 68%. Harvest activity will remain slow for the next couple of weeks with forecasts for above normal temperatures and above normal precipitation keeping fields muddy. Brazil’s corn acreage is expected to come in about 1% ahead of last year. U.S. corn basis is firm, and the Dec to Mar spread narrowed by 1/4 cent today, as end users are finding it difficult to procure supplies. Dec corn traded within a quiet inside session today, only within a range of 2-3/4 cents. Mar and May corn also made inside sessions, and all three contracts are oversold.
SOYBEAN HIGHLIGHTS: Soybean futures were slightly lower today, with Nov down 3-1/4 to 9.02-1/2. Jan beans were down 1-3/4 to 9/15-1/4, and Mar beans were down 1-3/4 to 9.28-1/2. Yesterday afternoon’s Crop Progress report was supportive, with 85% of the soybean crops harvested, versus the average market guess of 87%. Brazil’s Ministry of Agriculture Supply department increased its projections for Brazil’s 2019 soybean plantings to 36.7 million hectares, 2.3% above last season. This is likely spurred by the improving weather and planting pace that is quickly catching up. The best traded Jan contract was trapped today between its 100-day moving day average support level and its 50-day moving average resistance level. Prices made a bearish outside day, and though not a major development, the trend is still lower. Most soybean futures contracts are oversold at this point, though head-and-shoulders formations still point lower.
WHEAT HIGHLIGHTS: Wheat markets found a swift correction from yesterday’s strength, with Dec Chi down 8-1/2 cents to 5.08-1/2. Dec KC wheat was down 14 cents to 4.24-3/4, and Dec spring wheat was down 6-1/2 to 5.15-1/4. The U.S. dollar was slightly higher today, continuing its recent uptrend and keeping the pressure on the global wheat crop. Winter wheat plantings came in at 92% yesterday afternoon, versus the average market guess of 93%, and winter wheat conditions were seen lower than expected, reported at 54% good to excellent, versus the average market guess of 57% good to excellent. The big story yesterday was the strength of the KC / Chi spread, but that spread corrected hard today. In Dec, the KC / Chi spread made a bearish key reversal and has started to return from overbought levels. That spread was down 6 cents, and a Mar spread was down 3-3/4. Dec Chi wheat was unable to hold yesterday’s close above the 10 and 20-day moving average levels and fell back below today. Dec KC wheat closed above its 100-day moving average level for the first time since July but promptly fell back below. Dec spring wheat made an inside session enclosed just off the lows of the day.
CATTLE HIGHLIGHTS: Cattle markets made a sharp break lower today, with Dec lives down 1.65 to 118.10. Feb lives were down 1.47 to 124.10, and Apr lives were down 30 cents to 126.75. Nov feeders were down 2.22 to 145.47, and Jan feeders were down 4.30 to 142.82. A few head of cattle were sold today in Kansas and Texas at 115, steady to slightly higher from last week. Technically, cattle markets had a bit of a breakdown today. Dec lives closed below their 10-day moving average level for the first time since September 10 and retested their 20-day moving average support level for the first time since September 17. Feb lives also closed below their 10-day moving average for the first time since September 10. Jan feeders closed below their 10 and 20-day moving average levels for the first time since September 10 as well.
LEAN HOG HIGHLIGHTS: Hog markets were lower today, with Dec down 1.60 to 63.12. Feb hogs were down 1.00 to 74.55, and Apr hogs were down 27 cents to 81.75. The CME lean hog index was down 50 cents to 58.94. Carcass cutout values closed 2.19 higher yesterday to 88.53 and were down 1.32 at mid session today to 87.21. The break in pork values is likely the reason for the selling today, especially given the choppy cash pig prices lately and the downtrending China spot pig prices. Dec lean hogs made a bearish outside session today, briefly testing their 10 and 20-day moving average levels but closing below yesterday’s lows. Feb hogs made a bearish key reversal today, and Apr hogs posted their second consecutive close above the 20-day moving average for the first time since late October.