News Source: SPC
Top Farmer Closing Commentary 1-24-20
CORN HIGHLIGHTS: Corn futures gave back yesterday’s strong gains and then some with futures losing 5 to 6-1/2 cents with Mar leading today’s losses closing at 3.87-1/4. After reaching their highest price since early November, today’s downward close in futures was a disappointment. Spillover weakness from weaker commodities in general as soybeans, wheat, and energy prices all plummeted. Worries of the coronavirus spreading seems to have impact on trader’s minds as they head to the sidelines for safer ground. For the week, Mar corn lost 2 cents. Overall, bears have to be concerned that prices are consolidating on a lack of friendly news and good weather in South America. Bullish traders, however, also have to be concerned that futures are getting little friendly news and all hopes for something friendly out of the January Supply and Demand report were dashed as yield estimates went up rather than down as the market was expecting. It continued slow export pace as a concern as well. Today’s export sales figure, however, was supportive at just under 40 mil bu. Year to date, however, total sales are 799.5 mil, well behind last year’s 1.271 mil.
SOYBEAN HIGHLIGHTS: Export sales of 29 mil bu old crop and 4.4 mil new crop were considered solid but not enough to help bean prices as they continued their way down. Today’s losses included 7-1/2 cents in Mar closing at 9.02, and new crop Nov down 8-1/2 at 8.38-3/4. The plunge in bean prices comes on the heels of another good weather forecast for both Brazil and Argentina and perhaps more importantly, growing concern and fear that demand could be diminished because of the outbreak of coronavirus in China. To us, that’s a real stretch to try and equate the two, but China’s holiday weekend starts tomorrow and expectations are that demand for all products will be lessened as movement in the country could come to near a standstill. Nonetheless, we think the driver right now is good weather in South America and expectations for near record crops. Early harvest is underway in parts of Brazil and some feedback suggests high yield.
WHEAT HIGHLIGHTS: Wheat futures ended the day with losses of 6-1/4 in Mar KC closing at 4.86 to 7 cents in Mar Chi closing at 5.73-1/2. Mpls Mar led today’s markets lower closing 8-1/4 softer at 5.47-1/2. A weekly reversal was posted in the Mar Mpls contract and this might suggest a near term, if not longer term, top could be in place. As for KC, this week’s trade was noneventful from a technical perspective, nor was it for Chi as Mar Chi still finished with positive gains. Prices reached their highest level this week in more than four months, but only finished with modest gains of near 3 cents for the week. Commodities as a whole were under pressure today, primarily from a lack of new positive news, but also the coronavirus which has a negative impact to marketing trading often sending traders to the sidelines until more certainty is to be had. Traders don’t like uncertainty and right now this increasing concern over the virus could be responsible in part for today’s lower values, not only in grains, but also in energy and equities.
CATTLE HIGHLIGHTS: Cattle futures finished mixed as front month Feb was 17-1/2 cents higher to 124.85 and Apr also 12-1/2 cents higher to 124.30. Deferred contracts did see marginal weakness with losses from 17 to 30 cents. For the week, the Apr contract saw selling pressure led by yesterday’s technical break with prices down 2.95 for the week. Today’s cattle trade stayed relatively light and choppy as the market was anticipating cattle on feed numbers on Friday afternoon. Cattle on feed numbers brought little surprise and stayed in line with expectations. Total cattle on feed as of January 1st was 102% of last year, placements at 103% of last year, and marketings at 105% of last year. Again, all three numbers came in line with analysts’ estimates and comfortably within ranges. Next week’s cattle movement may bring some snap back without any surprise seen in those numbers, and Thursday’s selloff could be viewed as overdone and cattle futures could work back into its sideways trading range. Regardless, the close this week did bring some technical weakness into cattle charts and may bring some additional follow through if short term fundamentals stay weak. Cash trade was relatively steady week over week with most trade at 124.00 this week. Retail values stayed choppy this week, but choice carcasses did gain in value vs selects which may be an improving trend helping widen the choice select spread. As that spread widens, it’s usually reflective of feedlots becoming more current.
LEAN HOG HIGHLIGHTS: Hog markets made triple digit losses today in some disappointing pressure following yesterday’s gains. Feb hogs were down 1.27 to 67.22, Apr hogs closed 1.90 lower to 73.45 and Jun hogs were down 1.42 to 86.40. The CME lean hog index was up 27 cents to 61.29, its highest value since November 4th. Carcass cutout values closed 10 cents higher yesterday afternoon to 78.84, but were down 1.24 this morning to 77.60. The drop in product values today was likely due to questions about China buying as the government struggles with containing coronavirus. U.S. pork export sales for the week ending January 16th were reported this morning at just over 30,000 tons, down from 39,000 tons last week, but was the second highest weekly reading since December 19th. Mexico was the biggest buyer at 10,400 tons. China only bought 3,000 tons. Cumulative sales for 2020 have reached over 578,000 tons, more than double last year’s pace. Selling action today also took on technical characteristics after closes just below nearby resistance yesterday. The best traded Apr contract tested its 10 and 20-day moving average resistance levels at yesterday’s close and fell below the 10-day moving average support level today. The Feb and Jun contracts saw similar price action.
Top Farmer Midday Update 1-24-20
Corn futures are a bit soft this morning with Mar down 2-1/2 to 3.91-1/4, May is down 2-1/4 to 3.96-1/4, and Jul is down 2-1/4 to 4.01. Argentina corn production estimates are beginning to come down which is supportive, and China corn imports in Dec were 76% higher than imports in December 2018. This may lead some to believe that China has less corn than initially thought and may spur purchases in the future. The U.S. sold 144,000 tons of corn to Guatemala and 141,000 tons to unknown destinations yesterday. On this morning's export sales report, the U.S. sold just over 1 mil tons of corn for the week ending January 16th. This is up 28% from last week and up 92% from the previous 4-week average. Despite the bullish fundamental tilt, funds appear to be defending their hefty short position today, pushing Mar futures to a test of their 10, 20, and 100-day moving average support levels. Prices have since bounced back to the middle of the day's range, but are still lower for the day. Speculative funds were thought to have bought about 14,000 contracts of corn yesterday.
Soybean futures are pushing lower today after making a decent mid-session recovery yesterday afternoon. Mar beans are down 5-3/4 to 9.03-3/4, May is down 5-1/2 to 9.17-3/4, and Jul beans are down 5-1/2 to 9.31-1/2. Brazilian soybean harvest has begun and most are expecting a record crop. Earlier harvested beans in Mato Grosso are yielding 10%-15% higher than last year. There have been no signs that China has started to ramp up U.S. soybean purchases at this time and the coronavirus outbreak is causing additional uncertainty. Soybean prices pushed to 6-week lows yesterday and are well into oversold territory. Mar beans have traded as low today as 9.02, the lowest price since December 6th. The U.S. sold about 790,000 tons of soybeans for the week ending January 16th, up 23% from last week and up 59% from the previous 4-week average. Speculative funds were thought to have sold about 5,000 contracts of beans yesterday.
Wheat markets are off to a rough start this morning with Mar Chi wheat down 8-1/4 to 5.72-1/4, Mar KC wheat is down 5-1/2 to 4.86-3/4, and Mar Mpls wheat is down 4-3/4 to 5.51. The strength in the U.S. dollar and weakness in the grains complex is weighing on wheat markets today. China's Dec wheat imports were 111% higher than their wheat imports in December 2018, which could indicate a significant boost to U.S. export demand when China ramps up their phase 1 trade deal purchases. Mar Chi wheat is currently testing its 10-day moving average resistance level, still under general weakness from Thursday's session. Mar KC wheat is testing nearby support at the 20-day moving average after falling below the 10-day and Mpls wheat futures are testing their 200-day moving average support level. The U.S. sold 696,000 tons of wheat for the week ending January 16th, up 7% from last week and up 58% from the previous 4-week average. Speculative funds were thought to have bought about 4,000 contracts of Chi wheat yesterday.
Cattle markets are mixed to mostly lower with Feb lives up 10 cents to 124.77, Apr lives are down 32 cents to 123.85, and Jun lives are down 52 cents to 115.80. Jan feeders are down 72 cents to 142.05 and Mar feeders are down 1.10 to 139.42. Beef values are still moving slowly higher, which should be a positive for the cash markets. Cash cattle trade in the country has so far been quiet this week with just a few head sold in NE at 124.00 yesterday. Still, carcass weights are heavy and economic instability due to the coronavirus spread is a negative factor. Apr lives traded at their lowest levels this morning since October 31. Live cattle have fallen below their Bollinger band support lvels though stochastics are not yet getting oversold readings. Prices have rebounded to near the highs of the day though the momentum indicators are still turning over. Mar feeders have fallen below their 100-day moving average support level for the first time since September 24th and are trading at their lowest values since November 22nd. Prices are oversold though crossing moving average lines are pointing lower.
Hog markets are showing triple digit losses so far with Feb down 1.22 to 67.27, Apr is down 1.95 to 73.40, and Jun is down 1.87 to 85.95. The CME lean hog index is higher and pork values were higher at yesterday's close. Some are beginning to think that China's slow buying pace in the grain and oilseed markets may be pointing to increasing purchases in the meats, but this has not exactly materialized either. China bought just 3,000 tons of pork this week from the U.S. Today's price action could also be technical in nature with many unsuccessful tests of nearby resistance yesterday. Apr hogs tested but were unable to break through the 20 and 50-day moving average resistance levels yesterday and have fallen back below nearby support at the 10-day moving average this morning.
Top Farmer Closing Commentary 1-7-2020
CORN HIGHLIGHTS: Corn futures ended quietly with little change. Nearby Mar closed 1/4 lower at 3.84-1/4, with a trading range of less than 3 cents, while Dec corn finished unchanged at 4.00. As we look ahead toward Friday, the market appears to be already position squaring. Friday, the USDA will release the much anticipated last yield estimate, and therefore production estimate of the year. Pre-report numbers indicated average yield at 166.2 bushels per acre, with a range of 164.8 to 168.5. The Nov estimate was 167 bushels. As we move into the report, we would not be surprised if the numbers are relatively neutral. The USDA will likely need more time to quantify corn standing in fields, test weights and harvested acres. These potential changes, or adjustments, will likely occur in the quarterly Stocks report in March or June.
SOYBEAN HIGHLIGHTS: Soybean futures finished relatively unchanged, with nearby Jan closing 2-1/4 higher, while Mar closed 3/4 cent lower. New crop Nov closed 1/2 lower at 9.73-1/2. Today’s close in Mar at 9.44 and subsequent trading range of near 7 cents suggests that the market is content to consolidate after sliding late last week. Friday’s reports, along with weather in South America, will be the biggest movers of price in the weeks ahead. Expectations are that yield will be slightly lowered from 46.9 bushels on the November estimate to 46.6 bushels per acre on this month’s report. Projected carryout is forecast at 424 million bushels. Projected world carryout for soybeans is anticipated at 95.23 million metric tonnes, versus the December estimate of 96.40. A slight draw-down is expected due to drier weather in parts of Brazil and Argentina.
WHEAT HIGHLIGHTS: Like the corn and soybean markets, wheat finished quietly as well. Nearby Mar Chi gained 1/4 cent and closed at 5.50-1/4, while May closed down 1/2 at 5.53-1/4. KC closed down 2-1/4 at 4.75 on Mar, and Mpls Mar was down 1-1/4 at 5.46-3/4. Trading ranges were limited between 5 and 7 cents, with prices mostly unchanged by day’s end. Attention will turn to Friday’s much anticipated quarterly Stocks and Supply and Demand reports. From a world perspective, projected carryout is expected at 287.32 million metric tonnes, versus the December estimate of 289.5 million. Without big expectations of change, the market may continue to trend sideways, waiting for further developments on worldwide weather. Generally dry conditions, particularly in Australia, have likely been factored into price. There is not necessarily much reason to be bearish on prices, yet once Friday rolls around, if the ending stock number is not surprisingly friendly, prices may have seen their near term top.
CATTLE HIGHLIGHTS: Cattle markets closed lower today but were able to recover and close off of the early session lows. Feb lives were down 75 cents to 126.52. Apr lives were down 72 cents to 127.37, and Jun lives were down 47 cents to 118.97. Jan feeders were down 1.52 to 145.90, and Mar feeders were down 1.22 to 145.12. Choice beef values closed 1.16 higher yesterday afternoon to 209.65, up slightly from the same time last week. Choice beef was down 8 cents this morning to 209.57. Though cash cattle traded 2.00 higher last week from the previous week, the market seems somewhat hesitant to buy into a further cash advance. A steady flow of cattle appears to be moving into the market, and the last three Cattle on Feed reports have shown higher placements than last year. Many are still hoping for China to become a bigger buyer of U.S. beef prices once the Phase 1 deal is signed next Wednesday, but there hasn’t been much (if any) indication from China that beef would be a major target of new purchases. Feb live cattle briefly tested their 10 and 20-day moving average support levels and were able to close in the upper half of the day’s range. Today’s price action never left yesterday’s range, keeping the trend choppy. Jan feeders also made an inside session but were not able to limit the losses on the day as well as the live markets. Prices still held their 10-day moving average support level, and the trend looks mixed to higher.
LEAN HOG HIGHLIGHTS: Hog markets finished moderately higher with Feb up 60 cents to 69.22. Apr was up 80 cents to 75.75, and Jun hogs were up 67 cents to 87.60. The CME lean hog index was up 57 cents today to 59.19. Carcass cutout values closed 54 cents higher yesterday afternoon to 74.76 but were down 65 cents this morning to 74.11. The market still seems to question whether China would be a major importer of U.S. pork once the Phase 1 trade deal is signed, and if so, when? China has a major New Year celebration coming up soon, but there are a few indications that China buying may be subsiding ahead of that. The best traded Feb contract was able to close just off the highs of the day. Prices began the session under pressure, pushing to early losses of 60 cents but recovered into the afternoon. Apr hogs also closed just off the highs in more stabilizing action after Friday’s sharp sell-off.
Top Farmer Midday Update 12-31-19
Corn futures are currently trading softer in today’s trade as the Mar contract is down 1-1/2 cents to 3.86-3/4, while the May contract is down 1-3/4 cents to 3.93-1/4. The corn market continues to battle with moving averages, today testing the 50-day moving average underneath the Mar contract. Again we see follow-through selling after yesterday’s disappointing close as corn futures tried to push out the start of the session only to end with a lower close on the day. Overall, the corn market continues to stay in the consolidation phase holding near this area for the past 10 trading sessions. The market did turn negative on yesterday’s export inspections numbers which were below expectations at 16 million bushels, and still below the USDA’s pace to meet export totals.
Soybean futures are currently trading softer, with front-month Jan contract down 2-3/4 cents to 9.36-3/4, while the Mar contract is down 2-1/4 to 9.50-1/4. The bean market has been choppy on the last trading of the year after a strong push higher in yesterday’s trade in anticipation of the Chinese delegation coming to the U.S. to sign the Phase One deal. We got confirmation that that deal will not be signed until January 15, so that may bring some caution into the soybean market today. In addition, soybean futures have been choppy based on aggressive trade in both meal and oil markets, which has seen a strong selloff in soybean oil prices today and a volatile session in the soybean meal as traders are possibly working soybean oil/meal spreads. Overall, beans have seen the near 70-cent rally mostly off of short covering. South American weather still stays relatively favorable for the development of their crop.
Wheat markets are trading softer in Chi contracts with Chi Mar contract down 1-1/2 to 5.54-1/2, while May is down 1-1/4 to 5.57-3/4. Other wheat classes are mixed today with KC wheat trading slightly softer in front months and Mpls wheat firmer. Wheat has had a strong rally into the end of 2019, but may be pushing toward some seasonal highs as contracts are challenging highs from last June. While a weakening dollar in today’s session, trading to its lowest point since June, is favorable in wheat prices and overall demand has improved, the market may be looking a bit toppy in this window.
Cattle markets are trading mostly lower, with supported strength in the Dec contract up 55 cents to 124.65. Feb cattle are 60 cents lower to 125.80, while Apr cattle are 65 cents lower to 127.02. Today is the last trading day for the Dec contract. Cattle prices are staying in consolidation mode as the market anticipates retail values possibly stabilizing and still is moderate support from a strong cash market. Cash prices are undeveloped so far this week, and will likely take to the end of the week before we see significant trading volume. Asking prices are around 125.00 in the South and 200.00 for dress cattle in the North.
Hog markets are trading softer, with the front-month Feb contract down 50 cents to 71.30 and Apr down 37 cents to 78.25. After a strong move higher in the Feb contract, prices are seeing some profit-taking going into the end of the year today. Strong premium of front-month contracts to lean hog index, as well as farm cash values, may make rallies difficult in the short term as this premium is built on the anticipation of Chinese demand for U.S. pork. The Phase One deal was thought to be signed this week, or early next, but will be postponed until January 15, This may be bringing some caution into the market overall in the short term. Retail values and firming cash will still be the key going into 2020, and carcass strength was noted at midday yesterday.
Top Farmer Closing Commentary 12-30-19
CORN HIGHLIGHTS: As anticipated, it was a quiet day in the corn market with a limited trading range of near 4 cents on most futures contracts. By day’s end, prices ended weaker finishing 1/2 to 1-3/4 lower as Mar led today’s decline closing at 3.88-1/4. New crop Dec closed down 1/2 at 4.03 after reaching a high of 4.04-1/2, its highest price since late October. Today’s trading ranges were outside of Friday’s and would constitute a reversal. This needs to be watched carefully as some indicators could suggest overbought and consequently, a correction had. Yet the 50 and 100-day moving averages held as support in the Mar contract today. Weekly export inspections released this morning were 16.1 million bushels and considered a disappointment. Year-to-date numbers are running well behind last year which would make some argument for the potential of another decline in projected carryout due to smaller exports. Yet, much of the reason for this year’s smaller sales figure is heavy competition from Brazil in summer and fall. This corn is mostly used up.
SOYBEAN HIGHLIGHTS: Soybean futures had an impressive showing today gaining 7-1/4 to 11 cents as Mar led today’s gains closing at 9.52-1/2, its highest close since late October. Nearby Jan gained 10 cents closing at 9.39-1/2 and new crop Nov 7-1/4 closing at 9.77. The Nov soybean futures divided by Dec corn futures ratio is now 2.42, which could imply that farmers may be considering potentially not switching more acres to corn, as many currently will be believed to be the case. A less expensive crop to grow and the need for beans in rotation could suggest more bean acres, especially if prices continue to move higher. It’s not so much the ratio that matters it’s the dollars per acre generated, assuming normal crop production, that beans could appear attractive. Supporting prices today was a strong export inspections figure at 33.5 million bushels and short-covering as funds continue to look at the potential trade agreement with China as more and more realistic. Talk today had it that China could send a delegate over as soon as next week for signing Phase One. There will be a lot of rumors and speculation but at this point, we see nothing suggesting a sidetrack from the verbal agreement between the two nations.
WHEAT HIGHLIGHTS: Wheat futures finished mixed in Chi as Mar closed 1/4 lower at 5.56 and new crop Dec up 1-3/4 at 5.75. KC closed 3/4 to 1 higher and Mpls 3-1/2 to 5-1/2 higher. Prices were jumpy and traded on both sides of steady throughout the session but eventually clawed back to positive territory keeping the uptrend intact. Prices reached their highest level on the overnight trade and early this morning when Mar futures peaked at 5.64-1/2, price not seen since the market peaked in summer at 5.73. As the end of the year approaches, it’s understandable if traders begin to take some dollars out of the market. Nonetheless, the current uptrend is textbook in design with a series of higher highs and higher lows and corrections proving to be buy opportunities. Yet, today’s failure to hold strong could signal that the market may weaken into the new year. However, this may not be all that likely as prices could drift but probably won’t break as long as dry weather seems to be a major issue throughout parts of Australia, Argentina, Europe, and the U.S. Export inspections today at 11.5 million were disappointing, yet year to date inspections total 14.48 million metric tonnes, this compares to 12.678 million metric tonnes a year ago.
CATTLE HIGHLIGHTS: Cattle futures ended the day mixed with nearby Dec gaining 60 at 124.10, while deferred contracts finished steady to 27 lower. The last trading day for Dec live cattle is tomorrow. It appears traders were short covering positions today and consequently, this put upward pressure on prices. Deferred months continue to hold a premium to most cash bids and the expectation is that cash will firm into the first quarter. While we don’t disagree, we also believe that there’s likely ample inventory and unless the consumer is willing to pay more for beef than pork, the cattle market is looking somewhat tired. It has held together better than anticipated and this may be in part due to strong demand for various cuts, especially ground meat. Expectations are that supplies will continue to tighten in the U.S. as China searches for protein needs due to African swine fever limiting hog production. If bullish traders are on the sidelines waiting for an opportunity for the new year, we wouldn’t be surprised if prices did move higher but we still contend that demand has to be the driver.
LEAN HOG HIGHLIGHTS: Hog futures finished with gains of 10 to 122 points as Feb led today’s gains closing at its highest level since mid-November. Today’s breakout above the 50-day moving average and above the high from December 13 suggests that the pennant along with the wedge formation might suggest a potential rally up to 76.00, retesting the high from early in November. Expectations that affordable pork in the supermarket will feature strong consumer buying, may prompt prices to recover, not only to that level, but perhaps in Feb to the October high of near 78.00. Daily slaughter numbers continue to remain what we would term ample or more than ample yet demand will be the driver for this market. Some expectations for tighter supplies into the first and second quarters will provide underlying support as will continued expectation that pork will move aggressively to China in the months ahead. Estimated slaughter today was 486,000.