News Source: SPC
Top Farmer Closing Commentary 1-18-19
CORN HIGHLIGHTS: Corn futures finished steady to 2 cents higher in today's trade. Front month Mar corn was up 1-3/4 cents to 3.81-3/4, while Dec corn futures finished 1/2 cent higher to 4.03-3/4. For the week, Mar corn futures finished 3-1/2 cents higher despite a difficult start to the week and posted a reversal on those weekly charts. Dec corn futures likewise was 2-1/4 cents higher and posted an outside trading week to the positive side. Both are improved technical pictures after markets looked dismal after Tuesday's strong selloff. Yesterday, prices held key trend line support before rumors regarding improved U.S. and Chinese trade stances caused strength across the grain complex. That strength continued into today's session as markets saw additional short covering, as well as additional rumors regarding U.S. and Chinese trade stances. In a Bloomberg article this morning, China proposed a 6-year plan of buying U.S. products that would eliminate the trade deficit between the two countries by 2024. This would involve over a trillion dollars worth of agricultural and industrial purchases. Again, these are only rumors, and nothing concrete has come out of the negotiations which will start again at the end of the month here in the U.S. South American weather also stays active in the markets as recent weather patterns are seeing a combination of improved rain chances for some regions, but excessive dryness in others. As we are in a key window for crop development in South America, the next few weeks could pose to be a mover in the marketplace.
SOYBEAN HIGHLIGHTS: Soybean futures were the strength of grain markets today as contracts finished from 7 to 9 cents higher. Front month Mar beans gained 9 cents to 9.16-3/4, while Nov beans gained 7-1/2 cents to 9.55-3/4. For the week, the Mar soybean contract finished 6-1/2 cents higher while Nov beans posted a 3-3/4 cent gain. Strength in the bean market for the second-straight day were linked to positive rumors about Chinese and U.S. trade negotiations with the suggestion that China could be aggressively buying U.S. products over the next handful of years. China's goal is to reduce the trade surplus between China and the U.S. by 2024 with the increasing purchase of over 1 trillion dollars worth of U.S. exports. In addition, rumors that Chinese importers stepped into the soybean market to purchase U.S. beans helped provide support to the overall price. Again, these are rumors that are not confirmed, and are good headline news, but provide risk within the marketplace. South American weather will now stay strongly in focus as we're in the key-development stage of the Brazilian soybean crop. Argentina is seeing excessive wetness, which may limit acreage and overall production. Brazil's crop is experiencing hot/dry conditions in certain regions, and while weather forecasts have improved, some damage may be done. Overall, the South American crop will still be plentiful despite areas of disappointment. Technically, soybean futures have rallied to the top-end of the trading range and a tightening wedge-pattern formation which may be poised for a breakout. Bearish fundamentals would limit prices to the upside, but potential trade and improvement in bringing the Chinese importers back online could give us a breakout to the upside.
WHEAT HIGHLIGHTS: Wheat futures saw two-sided trade today as front month Chi contracts finished mixed. Front month Mar wheat finished unchanged to 5.17-3/4, while the May contract was up 1/2 cent to 5.23-1/2. Mar KC hard red winter wheat contract posted a 2-cent gain to 5.06, and the Mar Mpls spring wheat contract finished 2-1/4 cents higher to 5.74-1/4. For the week, Mar Chi lost 1-3/4, while Mar KC was 1-1/2 cents higher. The wheat market saw some push yesterday with the possibility of a sale of wheat to China causing the market to aggressively short cover. Today saw two-sided choppy trade as the market was looking for direction. KC wheat contracts saw support again today with those rumors of Chinese wheat purchases, as the spread between KC and Chi recently has begun to narrow. KC wheat would be the likely source for those sales, but unfortunately nothing can be confirmed with the partial government shutout regarding export news. Weather across the Plains looks to be turning colder, and this year's winter wheat crop does have some snow cover. Weather is not a short-term concern but may come into play as we move closer to dormancy in the weeks ahead.
CATTLE HIGHLIGHTS: Cattle futures finished mixed as front month Feb was down 57 cents to 126.52 and deferred contracts all showed positive gains. Apr cattle was 47 cents higher to 127.37, while Jun cattle finished 62 cents higher to 117.45. For the week, Feb cattle finished 1.55 higher, while Apr cattle posted a 1.00 gain. Front month contracts saw some pullback as cash trade stayed relatively undeveloped, but earlier bids did see some softening from mid-week. Cash trade stayed undeveloped at the time of this writing with most bids at $123 and asking prices from $127-$130. Cash trade will likely develop late this week and will likely stay steady to firm with last week's $124 levels. Overall, the market is seeing solid support this week as weather conditions in feed lot regions have been very difficult and the prospects of another storm coming through this weekend only added to those poor lot conditions. Cattle weight gains have been limited, and feed lot performance has been slowed as cattle are dealing with muddy/wet conditions mixed with snow and now cold temperatures, which will freeze lots solid. Retail boxed beef trade was firm at midday with choice carcasses 37 cents higher and select carcasses 1.95 higher. Direction next week will likely be based on cash trade with Feb holding a value of 126.50 at a premium over last week's 124.00 cash values.
LEAN HOG HIGHLIGHTS: Hog futures posted strong triple-digit gains in today's trade as front month Feb was up 37 cents to 61.22 and Apr hogs finished 1.65 higher to 66.27. That triple-digit strength moved all the way through the summer into next fall's positions. For the week, Feb hogs lost 1.42, while Apr pigs lost 1.07. Hog futures have been trying to etch out a bottom of this most recent selloff, and the strong push lower on Tuesday may have been that early indication. Summer month hogs hit the 50% retracement level on the Fibonacci sequence from last summer's low to the most recent highs. This provided a nice technical support point; which prices have bounced since. Improved relations between U.S. and China, with the prospects of China making commitments to buy U.S. products, especially pork, helped bring short covering into the market quickly on today's session. Before softening at the close, Apr futures challenged limit-higher trade today. Strength in today's market has been more on the technical side with prices holding those key support and then showing some upside follow through. Cash prices trended higher in today's trade, providing support to front month and retail carcass values were softer at midday, down 51 cents.
Top Farmer Midday Update 1-18-19
Corn: Corn futures are finding more buyers today on a slew of rumors regarding trade negotiations with China. The Mar contract is up 2-1/4 cents to 3.82-1/4, May is up 2-1/2 cents to 3.90-1/2, and Jul is up 2-1/4 to 3.97-3/4. There were rumors circulating yesterday afternoon that China purchased some U.S. corn, but those reports are unsubstantiated at this time. There are also rumblings that U.S. tariffs on China could be lifted soon to progress talks and there are other rumors suggesting a deal may be closer than was previously thought. The Dec contract closed above its 200-day moving average for the first time yesterday since January 9. Dec futures traded as high today as 4.06, its highest level since November 8. Funds bought 23,000 contracts of corn yesterday and are thought to be long about 120,000 contracts.
Soybeans: Soybean futures are rallying again today, showing impressive strength on rumors of improving trade relations with China. The Wall Street Journal published a report yesterday suggesting that the U.S. could lift trade tariffs on Chinese goods as a way to break the current stalemate. However, the U.S. Treasury Dept denied rumors that Steve Mnuchin or Robert Lighthizer have made any recommendations regarding tariffs. Nonetheless, the stock market was buying the rumors. Other trade talks suggest that the U.S. and China are working towards a deal where China would buy 50 billion dollars in U.S. ag goods over two years. Brazil rains this weekend will be spotty, with South American weather again looking supportive. Funds bought 10,000 contracts of soybeans yesterday and are net short about 13,000 contracts.
Wheat: Wheat markets are only moderately higher today after a very strong session on Thursday. Mar Chi wheat is up 1/4 cent to 5.18, Mar KC wheat is up 2 cents to 5.06, and Mar Mpls wheat is up 1-3/4 cents to 5.73-3/4. Rumors yesterday that China purchased U.S. wheat drew a lot of buyer interest. In addition, cold temps forecasted for this weekend could stress the soft red winter wheat crop. The threat of winter kill is causing Chi/KC wheat spreads to rally again today. The Mar spread is sharply above its 50-day moving average level for the first time since October. Funds bought 6,000 contracts of wheat yesterday and are short about 8,000 contracts.
Cattle: Cattle markets are mixed this morning in very tight trading ranges. The Feb live cattle contract is down 42 cents to 126.67, Apr lives are up 20 cents to 127.10, and Jun lives are up 45 cents to 117.27. Jan feeders are up 2 cents to 141.45, Mar feeders are up 20 cents to 143.12, and Apr feeders are up 27 cents to 144.50. Yesterday's weakness and today's lack of strength is likely due in part to weather in the Plains this weekend that may not be as threatening as was initially expected. In addition, winter storms on the East Coast have the potential to stifle beef demand. This could pull beef prices even lower after drifting over the past couple of weeks. Futures prices are still holding their 10-day moving average support levels in the nearby live cattle contracts.
Hogs: Hog markets are sharply higher this morning after weakness early in the week. The nearby Feb contract is up 1.20 to 62.05, Apr was up 2.57 to 67.20, and Jun is up 1.97 to 79.85. Yesterday's hook reversal on the Feb hog contract may be signaling a bottom. African swine fever continues to spread in China. Australian Border Security intercepted some illegally imported pork products yesterday, some of which was found to be contaminated with African swine fever. Reports like this will put hog traders and the pork industry on high alert. The majority of today's strength is linked to a feeling of positivity related to U.S./China trade talks.
Top Farmer Closing Commentary 12-28-18
CORN HIGHLIGHTS: Corn futures finished with mild gains, as front month Mar closed 1 cent higher to 3.75-1/2, followed by May up 1 cent to 3.83-1/4. For the week, Mar corn futures lost 3 cents, while the new crop Dec contract was down 1-3/4. Corn futures had another quiet trading session, as the Mar contract traded an intraday range of 3 cents. Overall, it was a relatively quiet week with holiday trade, and the market failed to find any overall direction. Sideways trading has been the key, especially over the past handful of months, as the corn market may be building some base and consolidating for a strong move into 2019. Prices have been underpinned by strong demand, but ample supplies and producer movement have kept the topside on rallies in check. Moving into next year, focus will be on weather conditions in South America and the development of their crop. Dry conditions and hot temperatures remain a concern in southern Brazil, and heavy rains are expected in Argentina. Overall, crop conditions are mostly favorable. The market will closely look at the January 11 USDA report, as well as the meeting between U.S. and Chinese officials scheduled for the week of January 7.
SOYBEAN HIGHLIGHTS: Soybean futures were the strength of the grain market today, as contracts finished with double digit gains, up 10 to 13 cents. Front month Jan beans gained 13-3/4 to 8.82-3/4, while Mar beans were up 13 to 8.95-1/2. For the week, Mar soybean contracts, despite today's strength, still finished down 2-1/4 cents, while new crop Nov 19 beans were down 3/4 cent. The strength in the bean market came from weather forecasts for Brazil, which continue to show hot and dry conditions, which are concerning for crops in that region. Some beans being harvested in Mato Grosso are showing reduced yields, and the prospects of continuing difficult weather conditions may result in Brazilian bean crop yield reductions. Short positions in the market are cautious, as the South American crop is entering its key 3-4 week window for development, and weather forecasts will be directly in front of most traders. Fundamentals continue to weigh heavily on the market overall, and upcoming potential trade talks with China during the week of January 7 could bring a high amount of uncertainty into soybean futures.
WHEAT HIGHLIGHTS: Wheat futures, like corn, were more of a follower in today's trade, as the Chi contract saw 2-sided trade before finishing 1 cent higher in the Mar to 5.11-1/2, while May Chi wheat was up 1 cent to 5.18-3/4. Buying strength was noted in the KC wheat contract, as Mar gained 1 cent to 4.96, but Mar HRS wheat lost 1-3/4 cents to 5.50-1/2. For the week, Mar Chi wheat was down 16 cents. Selling pressure continues to weigh heavy on the wheat market, as the U.S. is still looking to be more competitive in a global marketplace. Wet weather has hampered some of the Argentine grain harvest, but the Buenos Aires grain exchange stated that 82% of wheat was harvested and is expecting the crop to reach 19 million metric tons. This continues to keep fresh supplies of wheat on the market and deters any potential growth for U.S. exports. Wheat prices technically held key support levels yesterday and may be trying to etch out a base, but as global competition continues to weigh on U.S. wheat bushels, a potential test lower is a possibility.
CATTLE HIGHLIGHTS: Cattle futures saw additional buying strength this afternoon, as contracts finished with marginal gains. Dec cattle futures led the way higher with gains of 1.15 to close at 124.07-1/2. Feb cattle gained 22-1/2 cents to 124.17-1/2. Monday will be the last trading day for Dec cattle, which had an explosive week up 3.20. Feb cattle gained 1.47-1/2 in this week's trade. Buying interest remains in the Apr contract, which posted a new contract high again today and gained 40 cents to 126.40. Speculator money moved into the cattle market yesterday, as a strong winter storm moved across the Midwest, which could be limiting weight gains as well as movement of cattle. Optimism for higher cash prices this week also helped add fuel to the buying in front month contracts. As of late this afternoon, cash trade was still relatively undeveloped as bids moved firmer to 118 and asking prices to 123. There were some rumors that cash trade posted near 120 or slightly higher, which would be 1.00 to 2.00 over last week's dollar level. Retail values were mixed at midday. While select carcasses dropped 8 cents, choice carcasses continue their late season strength, picking up 13 cents.
LEAN HOG HIGHLIGHTS: Lean hog futures traded mostly lower with the exception of small gains in the Feb contract. Feb hogs were up 7-1/2 cents to 60.65, while Apr hogs were down 17 cents to 66.50. Closes were relatively quiet, as all deferred contracts had losses between 7-1/2 cents to 25 cents today. For the week, Feb hogs lost 47-1/2 cents, while Apr hogs dropped 72-1/2 cents. Talk of oversold markets may have helped provide a little support on a Friday afternoon trade, as positions were squaring before the weekend. Both Feb and Apr hogs held trend line support or key technical support levels, which may bring some rebound next week on the technical side of the equation going into the last trading day of the year. At midday, carcass values were firmer by 94 cents to 71.38, and overall cash prices trended higher as the morning direct cash hog report posted weight averages up 20 cents. Overall, the complex is seeing lack of direction the past couple of trading sessions, as prices have corrected off of recent highs. Moving into January, the market is looking for direction.
Top Farmer Midday Update 12-28-18
Corn: Corn futures are trading 2 to 3 cents higher this morning with front month Mar up 2-3/4 to 3.77-/14, while May is up 2-3/4 to 3.85. Corn futures are seeing some technical bounce after yesterday's trading session, holding key trendline support underneath the corn contracts. With the government shutdown, no information on weekly export sales was reported today, but today's move is more technical, based on strength seen on the downside markets, as well as across the entire grain complex. Markets are likely seeing some position squaring as we are moving into the end of the year, with an eye focusing on the next USDA report on January 11.
Soybeans: Soybean futures are trading strongly higher with contracts 12 to 15 cents higher today. Front month Jan beans are up 15-3/4 to 8.84-3/4, while Mar is up 15-1/2 to 8.98-1/4. The market is seeing some technical short covering as prices held key trendline resistance in yesterday's trade. In addition to the short covering move, the market is still digesting any potential trade news between the U.S. and China with the two scheduled to meet during the week of January 7. The South American crop continues to progress nicely but reports of dry areas in Brazil may have soybean production sliding lower by 2-3 million metric tons over previous forecasts. The calendar has the next 3-4 weeks as the key window for development of the Brazilian crop, and weather forecasts will be closely watched.
Wheat: Wheat futures are trading 1 to 2 higher today, with the Chi Mar contract up 2-1/4 to 5.12-3/4, while May is up 2 to 5.19. Wheat is seeing some strength, like the other grains, after holding key trendline support yesterday, as well as the overall strength in the grain markets helping to bring some short covering into the wheat market. Wheat futures may be limited in rally as U.S. demand has yet to improve to the level of expectations. Also, Russian Statistical Agency, Rosstat, said this year's wheat crop was 72.1 million metric tons versus the USDA at 70. Again, we continue to find ample supplies of grain to handle global demand at this stage, which will likely keep wheat futures rallies limited.
Cattle: Cattle futures are trading firmer with the Dec contract strongly higher at 124.47, 1.55 higher and Feb cattle is up 77 cents to 124.72. Strength continues throughout the entire cattle complex as we're seeing modest gains. Technical follow-through on yesterday's strong price action is providing some more movement of speculator money into the cattle market. A strong winter storm across the Midwest may be limiting weight gains, as well as movement of slaughter-ready cattle, bringing some strength into that market. The market is anticipating cash trade to be steady to higher, but at this stage it's still relatively undeveloped with starter bids at $117 and asking prices as high as $123. Cash trade will likely be developed after the trading session today and will be necessary to help maintain the strength seen in futures prices this week. Overall, retail demand has been favorable this week, helping to provide support to the futures market.
Hogs: Hog futures are trading mixed with front month Feb hogs 5 cents higher to 60.62, while Apr hogs are down 27 cents to 66.40. Deferred contracts in the summer months are seeing mild strength as contracts are 5 to 12 cents higher. Pressure on cash hog prices in this market still deals with large supplies of slaughter hogs keeping selling pressure on those front month contracts. In addition, Feb contracts are trading approximately a 6.50 premium over the index, which would limit any upside movement. Retail carcass values have been choppy this week and will likely stay in that pattern until the end of the year. Summer month contracts are still see buying support as development of ongoing concerns regarding African swine fever in China keep the potential for hog exports to that country improving with a forecast of a tighter supply picture for U.S. hogs as confirmed by the latest Quarterly Hogs and Pigs report.