News Source: SPC
Top Farmer Closing Commentary 7-23-19
CORN HIGHLIGHTS: Corn futures moved higher today with gains of 3-1/4 in Sep to 4-3/4 in new crop Dec closing at 4.31-1/2. Today's low in Dec was 4.24, close to reaching the most recent low of 4.20-1/2 from July 2. A gap in the charts still exists at 4.20 to 4.20-1/2. Today's hook reversal was encouraging and would likely argue that last night's crop ratings figure, down 1% and now at 57% in the good and excellent category, was viewed as supportive. Many were expecting a 2% to 3% increase in the good and excellent category instead poor to very poor category increased 1% to 13%. There is no doubt the weather has been conducive the last three weeks for corn production, yet ratings haven't shown improvement. The market is marking time awaiting further news, which is crop development, which is a function of weather and future USDA reports. The general consensus is that acreage will be down, but there's many estimates as to what this will actually look like. Bear in mind, all estimates are pivoted off of the March 31 planting intentions number. Therefore, if farmers were low in March, this could be a difference if acre numbers are not as reduced as anticipated. On the other hand, if farmers were intending to plant 92.6 mil acres in March and were really only intending to plant 91 mil, then a further reduction in acres could be substantial.
SOYBEAN HIGHLIGHTS: Soybean futures suffered small losses today of 2 to 2-1/2 cents as a relatively range bound market of near 11 cents from high to low was reflective more of a market apparently drifting today than anything else. Yesterday afternoon's Crop Progress reports indicated 40% of the crop in the blooming stage vs a 5-year average of 66%, and 7% of the crop in the setting pod stage vs 28% on a 5-year average. Ratings indicated that 54% of the crop is in good to excellent shape, unchanged from the previous week with the poor to very poor category remaining at 12%. From a technical perspective, prices continue to hold support. Today's test of the 50-day moving average and bounce off of this level is the third time in the last four sessions this has occurred.
WHEAT HIGHLIGHTS: Wheat futures traded on both sides of unchanged for most of the session and finished without much differential. Nearby Sep closed unchanged at 4.87-1/4, while Sep KC gained 2-1/4 closing at 4.31-1/2, while Mpls Sep closed down 3/4 at 5.20-1/2. The technical picture in wheat continues to look soft and today's close at the 100-day moving average is a sign the market seems to be hanging onto something. A slip under this level could send prices another 10 to 15 cents lower. When looking out to next year, Jul Chi at 5.29-1/2 may offer and opportunity to begin making cash sales if you have not done so yet. You may also consider hedge to arrive contracts. As we look ahead, expectations for a drawdown in Canada, Europe, Russia, and Australia all could contribute to the possibility that wheat prices extend an uptrend into next year. Yet, there was such a surplus of wheat available to the world in this past year that it is unlikely that a substantial rally is ahead of the market as a price recovery will likely lead, initially, to strong selling for those who have been storing. Harvest progress should pick up in a more strong fashion this week as it appears most of the wet weather pattern has pushed beyond the Plains and Midwestern states. There are only scattered chances of showers.
CATTLE HIGHLIGHTS: Cattle futures moved higher today with gains of 25 in Apr to 72 in Oct, closing at 109.87. Nearby Aug closed 60 higher at 109.05. Prices continue to hold their recent upturn with Aug futures closing at its highest level today since May 6. A very classic double bottom, or by some accounts what is termed a 1-2-3 bottom, along with follow through buying to the topside looks encouraging. Nearby Aug contracts is up against resistance which is the most recent high on May 17 at 109.77. There was good consolidation from late April through May. Should prices move above this level, look for a move to 110.90, the 100-day moving average. From a long term perspective, we remain supportive the cattle market as we expect higher grain prices, and now an improvement in cattle prices will likely keep producers fairly close to the knife. Ultimately, this helps provide underlying support. Recent hot temperatures probably effected weight gain as well. The question now is whether or not cattle prices moved high enough to defend or hedge. We think fence strategies are a good move.
LEAN HOG HIGHLIGHTS: Hog futures ended the day firmer and with strong gains of 120 to 295 points as Aug led today's gains closing at 86.17. The rally has been impressive with a solid close above the 50-day moving average for the first time since early May. Technical short covering and expectations of a decline in supplies as summer wears on help provide underlying support. We might argue we don't expect much of a decline in inventory, but higher corn prices and a big push lower in the hog market over the last three months may be enough catalyst to reduce the breeding herd and consequently hogs into the fourth quarter. All months were positive today with Aug holding a premium to all futures between now and next April. Keep an eye on summer months for next year as well as they are creating back above 90.00., an encouraging level from a long term historical pricing level.
Top Farmer Midday Update 7-23-19
CORN: Corn futures are trading steady to slightly weaker. Softer bean prices and a lack of new positive news is weighing on futures today despite a 1% drop in the good and excellent category on last evening's Crop Ratings report. Expectations for continued conducive weather in the week ahead is also a factor.
SOYBEANS: Bean futures are weaker today losing anywhere from 2-1/2 to 5 cents at mid-session. Aug is leading the way lower closing at 8.83-1/4. Futures are holding support, but a poor close yesterday below the 10 and 40-day, as well as 20-day moving averages is setting up a technical negative picture for bean futures.
WHEAT: Wheat futures have traded mixed most of the morning and trading near steady at mid-day. The technical picture looks very challenged with prices trading at or below the 100-day moving average on Sep futures. Harvest pressure is likely going to continue to pressure prices this week as good weather in the forecast should allow combines to run nearly wide open.
CATTLE: Cattle futures are trading with small gains of 7 to 32 cents on expectations for steady to stronger cash. Mixed cutout values are offering little direction.
HOGS: Hog futures are trading 45 to 1.60 higher on continued ideas of stronger ash. Slaughter numbers are remaining large, but today's move above the 50-day moving average in August looks supportive. The Oct contract, gaining 1.35, is up against the 100-day moving average at 80.85.
Top Farmer Midday Commentary 7-9-19
CORN: Corn futures are taking losses this morning with Jul, Sep, and Dec corn down 7-1/4 cents to 4.31-3/4, 4.32-1/4, and 4.36-1/2 respectively. Prices are finding some selling pressure partly on yesterday afternoon's Crop Progress report. Good to excellent ratings increased 1% over last week, now sitting at 57%. 98% of the corn is emerged vs 94% last week. Another source of pressure this morning has been weather forecasts. The 6 to 10 day outlook shifted from hot and dry to hot and mixed precipitation, while the 8 to 14 day forecast is now showing above normal temperatures and above normal precipitation. This should be beneficial for plant growth and is thus bearish for prices. Dec futures are trading back below their 10-day moving average level after yesterday's close above. A head and shoulders pattern is forming which could indicate lower prices later on. During yesterday's session, funds bought about 5,000 contracts of corn.
SOYBEANS: Soybean futures are mixed to mostly lower with Jul beans down 1/4 of a cent to 8.75, Aug beans are up 1/4 of a cent to 8.79-1/4, and Nov beans are down 1/2 of a cent to 8.97-1/4. Against expectations, soybean crop conditions actually dropped on yesterday's Crop Progress report. 53% of the soybean crop is rated good to excellent vs 54% last week. That is surprising due to the solid weather seen for most of last week. Despite President Trump's claim that China would restart large purchases of U.S. agricultural goods, news wires with such purchases have been quiet and many are beginning to wonder if these purchase will restart anytime soon. Nov beans traded to new lows for the move early on in the session, but have since rebounded. Nearby support lies at the 50-day moving average at 8.88-1/4. Funds were thought to have bought about 1,000 contracts of beans during Monday's session.
WHEAT: Wheat markets are finding sellers this morning after unsuccessful tests of resistance levels yesterday, as well as improving crop conditions. Sep Chi wheat is down 8-1/2 cents to 5.02-1/2, Sep KC wheat is down 6-3/4 cents to 4.34, and Sep Mpls wheat is down 5-1/2 cents to 5.27. Winter wheat conditions went from 63% good to excellent last week to 54% good to excellent this week. For this same week last year, just 37% of the winter wheat crop was rated good to excellent. 78% of the spring wheat is now rated good to excellent vs 75% last week. Weather in the Plains looks perfect for harvest activities though Chi wheat areas should get some rain over the next 8 to 14 days. Chi wheat contracts were unable to break above their 200-day moving average resistance level yesterday and the KC wheat contracts were unable to break through their 50-day moving average resistance. Winter wheat contracts are still in a consolidation pattern while the spring wheat contracts have fallen to new lows for the move. Funds sold 3,000 contracts of Chi wheat yesterday.
CATTLE: Cattle markets are higher this morning, holding onto nearby support levels. Aug lives are up 70 cents to 106.85, Oct lives are up 42 cents to 107.82, and Dec lives are up 40 cents to 112.27. Aug feeders are up 1.40 to 140.30, and Sep feeders are up 1.40 to 140.15. Despite the lowest beef prices since February, live cattle futures were able to hold their 50-day moving average support levels at yesterday's close. Live cattle futures have still not closed the gap created from Friday's session, and with good weather ahead, retail beef demand should begin to pick up noticeably. Feeder markets are likely finding buyers today on weaker corn prices, as well as a growing sense of optimism in the live cattle space. The best traded Aug feeder cattle contract is trading at its highest level since June 11.
HOGS: Hog markets are higher this morning, stabilizing hear recent lows. Jul hogs are up 95 cents to 71.02, Aug hogs are up 3.00 to 79.07, and Oct hogs are up 2.77 to 70.77. Though carcass cutout values continue to drift lower, good weather ahead should spur some retail pork demand. China's national average spot pig price is up nearly 2.5% on the week. China has yet to make sizable ag purchases from the U.S. lately. Many are doubting that this will happen anytime soon, but pork will likely be on the shopping list. Oct hogs made new lows for the move, hitting their lowest prices since February 20, but have since reversed higher mid-morning.