News Source: SPC

Top Farmer Closing Commentary 7-10-20

CORN HIGHLIGHTS: Corn futures closed with sharp losses disrespecting positive news in the form of export sales to China announced this morning and what we would term a supportive USDA report. China bought well over a million metric tons, of which 765,000 tons for delivery in the 2019/20 marketing year and 600,000 for the 20/21 season. Nearby July lost 10-3/4, closing at 340-1/2 and December losing 12-1/4, closing at 3.44-3/4. This, along with projected carryout, reduced 134 million bushels below the pre-report figure of 2.782 billion (now 2.684 billion) and world projected ending stocks at 315 mt, below the pre-report estimate of 325.6 million failed to provide support. It looked like the market responded to some moderating the heat in the forecast the next 10 days and to President Trump’s remarks this morning that he is not thinking about a “phase 2” US – China trade deal. It also appeared traders were interested in selling corn and soybeans and buying wheat. Whatever the case, today did not look good for bulls as prices closed at or near the low for the day.

SOYBEAN HIGHLIGHTS: Soybean futures closed 6-3/4 cents lower in July at 8.91-1/2 and 10-3/4 cents lower in November at 8.90-3/4. Today’s USDA reports were termed mostly neutral to slightly supportive. Old crop carryout came in at 620 million bushels above the average pre-report estimate of 589 million. However, new crop carryout was supportive at 425 million, below the average estimate of 443 million. World ending stocks for the year ahead are estimated at 95.1 million metric tons compared to the pre-report average of 97.7 mmt. Yet, prices slide on the President’s comments that he is not thinking about a “Phase 2” with China. Some forecasters were backing away from the high heat in yesterday’s forecast in their outlook for next week. We would argue little technical damage on charts today, unlike the corn market. Soybeans are still in an uptrend with a poor close to end the week. Weekly charts, however, do indicate a bearish hook reversal. If behind on sales, get current with recommendations.

WHEAT HIGHLIGHTS: Sept Chi futures up 9, closing at $5.34. Sept KC wheat down 4 3/4, closing at $4.52. The USDA raised old crop ending stocks 61 mb to 1.04 bb. Wheat production for 2020-21 was lowered 53 mb to 1.824 bb. Food demand for the 2020-21 crop held steady at 964 mb, but USDA lowered feed and residual use 10 mb to 90 mb. That brought down total domestic use 10 mb to 1.115 bb. The export forecast remained the same at 950 mb. Ending stocks for the 2020-21 crop were increased to 942 mb in the report, up from 925 million bushels last month. The average farm-gate price for the 2020-21 crop remained at $4.60 a bushel as well. USDA is still forecasting another record world wheat crop for the 2020-21 marketing year — 769.3 mmt — although that forecast declined from last month. USDA forecast global ending stocks at 314.84 mmt, trade was looking for 315.5 mmt, so this was bullish, but still a record number.

CATTLE HIGHLIGHTS: Cattle markets posted moderately higher closes to end the week. August lives were up 0.75 @ 100.00, October lives were up 0.65 @ 104.57 and December lives were up 0.95 to 108.40. August feeders closed 1.22 higher to 135.75 and September lives were up 1.15 @ 137.32. Choice beef closed 0.24 lower yesterday to 203.59 (lowest close since October 12, 2018) and were up 1.17 to 204.76. Slaughter has picked up in the second half of the week and Saturday will feature a large kill as well. Slaughter this week is expected to exceed last week by 12% and will come in about 0.9% ahead of the same week last year. This, plus heavy carcass weights, will keep fresh beef supplies flush, especially with bumpy restaurant reopenings. Cash wires today were quiet, but trade so far this week has been steady with last week’s prices near 94.00-95.00. Technical price action was relatively quiet today, with August and October posting inside sessions. The trend still appears steady to higher. August feeders tested the 10-day moving average support but were unable to break past the upper Bollinger Band resistance.

LEAN HOG HIGHLIGHTS: Hog markets closed the week out with a quiet, two-way session. July hogs closed 0.12 higher to 45.97, August closed 0.35 lower to 49.87 and October closed 0.70 lower to 49.85. The CME Lean Hog Index was up 0.59 to 65.37. Carcass cutout values closed 0.04 lower yesterday afternoon to 67.12 but were up 4.01 this morning to 71.13. Ham values have rallied 32.90 in the past two days to their current price of 71.09. Hog slaughter this week is expected to come in 28% ahead of the last week and 8% ahead of the same week last year. Exports lately have been strong, but this surge in production could make it difficult for pork prices to rally. China pig prices are still rallying (up 2.3% this week), and this is likely to continue as African Swine Fever outbreaks have been noted again in a few areas. August hogs held support today at the 10-day moving average but couldn’t break through the 20-day moving average resistance. October hogs made their first close above the 20-day moving average yesterday since June 15 but closed back below today.

Top Farmer Midday Update 7-10-20

CORN

  • July down 0.03 @ 3.4825, September down 0.035 @ 3.4575, December down 0.04 @ 3.53
  • Less threatening weather over the next week or so
  • Some forecasts for a ridge at the end of July that could last up to two weeks
  • Position taking ahead of WASDE report
  • Dec corn trading at the lows of the day so far
  • 100-day moving average support at 3.505 is still holding

SOYBEANS

  • July up 0.0125 @ 8.995, August down 0.015 @ 8.95, November down 0.0275 @ 8.9875
  • Rain in forecasts for the next week should aid in crop development
  • Ridge in forecasts for the end of the month could stress crop, especially if it persists into August
  • Strong weekly export sales total, China has been an active buyer
  • November has traded within a quiet, two-way session thus far
  • Stochastics are nearly overbought

WHEAT

  • December CHI up 0.035 @ 5.335, December KC down 0.025 @ 4.655, December MPLS down 0.0075 @ 5.385
  • Declining conditions in Argentina, France and Russia
  • La Nina weather pattern could further impact Argentina yields
  • Rains seen in northern US should keep spring wheat in good shape
  • Dec CHI wheat is testing resistance at the 100-day moving average
  • KC futures tested and failed to punch through the 50-day moving average resistance for the second session in a row
  • Spring wheat futures are barely hanging onto the 50-day moving average support

CATTLE

  • August lives up 0.52 @ 99.77, October lives up 0.25 @ 104.17, December lives up 0.42 @ 107.87
  • August feeders up 0.60 @ 135.12, September feeders up 0.50 @ 136.67
  • Lowest Choice beef values since October 2018
  • Cash trade choppy, mostly steady with last week
  • Heavy slaughter and beef production lately
  • August lives and feeders are trading just off the highs of the day but still within yesterday's range

HOGS

  • July up 0.12 @ 45.97, August down 0.35 @ 49.85, October down 0.82 @ 49.70
  • Cash Index is trying to turn higher
  • Sharp jump in pork values yesterday
  • Ham values have nearly doubled in the past two sessions
  • China pig prices are up 2.3% for the month so far
  • August hogs are still trapped between 10-day moving average support and the 20-day moving average resistance

/Top Farmer Midday Update /

CORN

  • July down 0.0225 @ 3.2675, September down 0.0225 @ 3.32, December down 0.02 @ 3.4075
  • Conflicting weather forecasts for the weekend
  • Northern and western parts of Corn Belt getting progressively drier
  • July corn closed at the 10-day moving average support level yesterday and opened below this morning
  • July futures are currently testing the 20-day moving average support level, and a close below would be the first since May 14
  • Funds sold about 1,000 contracts yesterday

SOYBEANS

  • July down 0.005 @ 8.665, August down 0.015 @ 8.6675, November down 0.0075 @ 8.7275
  • Meal futures choppy, oil futures still rallying with support from Palm Oil markets
  • Conditions in the Dakotas, Nebraska and parts of Minnesota are quickly declining
  • Precipitation totals and coverage this weekend will be key in driving direction until June acreage report
  • Soybean futures have been testing the 100-day moving average resistance levels for the past week or so and have not yet broken through
  • July beans opened below the 10-day moving average support level this morning, and a close below would be the first since June 1
  • Overbought stochastics
  • Funds sold about 2,000 contracts yesterday

WHEAT

  • July CHI down 0.08 @ 4.88, July KC down 0.0675 @ 4.315, July MPLS down 0.02 @ 5.13
  • Improving weather and conditions for European and Russian crops
  • Russia elected not to continue with an export quota for the rest of 2020
  • Dry weather in the Plains will aid KC harvest, but spotty moisture in the Dakotas may impact Spring Wheat conditions
  • July CHI futures at lowest prices since September, July KC wheat at lowest levels since March
  • Spring wheat futures are consolidating within yesterday’s trading range
  • Funds sold about 7,000 contracts of CHI wheat yesterday

CATTLE

  • June lives down 0.10, August lives down 0.32 @ 96.45, October lives down 0.17 @ 99.57
  • August feeders up 0.42 @ 133.30, September feeders up 0.35 @ 134.80
  • Increasing slaughter and weights will add to beef supplies
  • Cash cattle markets are drifting lower so far this week
  • Beef prices are nearly in line with the same time last year
  • August lives testing 10-day moving average after opening below
  • Choppy trend sideways still intact
  • August feeders trading just off session-highs and are testing the 100-day moving average resistance

HOGS

  • July down 0.60 @ 49.05, August down 0.10 @ 52.92, October down 0.47 @ 51.25
  • Cash index still trending lower though momentum may be waning
  • Pork prices choppy to lower
  • China pig inventories are increasing but spot pig prices are also rallying
  • July made new contract lows this morning but is trading in the upper end of the day’s range and back within the Bollinger Band range
  • August and October are pushing to new session highs

Top Farmer Midday Update --

CORN

  • July up 0.04 @ 3.3025, September up 0.0375 @ 3.355, December up 0.0275 @ 3.4425
  • Hot forecasts for the next two weeks with spotty moisture
  • China sold 4mmt out of state reserves this week
  • Stronger than expected ethanol production this week and lower than expected ethanol stocks
  • July futures are back above the 10-day moving average level after testing support at the 20 and 50-day moving average levels
  • Higher trend is still intact
  • Funds sold about 8,000 contracts yesterday

SOYBEANS

  • July down 0.0075 @ 8.6475, August down 0.0125 @ 8.665, November down 0.0175 @ 8.7525
  • Warm and mostly dry forecasts could support into the end of June
  • Rumors of China buying 3 cargoes of US beans overnight, though no confirmation from USDA Flash Sales announcement
  • Lower Brazilian real and higher US dollar are supportive
  • July beans have been choppy so far today without much direction
  • Possibly bull-pennant continuation pattern
  • Stochastics are nearly overbought
  • Funds bought about 1,000 contracts of corn yesterday

WHEAT

  • July CHI wheat down 0.02 @ 5.0425, July KC wheat down 0.0575 @ 4.5175, July MPLS wheat down 0.035 @ 5.16
  • Dry weather will speed up spring wheat plantings in North Dakota and speed up HRW harvest in Texas, Oklahoma, Colorado and Kansas
  • US dollar is lower today, but the Russian ruble looks toppy, and may further correct lower
  • Uncertainty regarding the quality of incoming European and Black Sea crops
  • CHI futures are making a bearish outside session after early test of resistance
  • KC futures fell through the 20-day moving average support level
  • Spring wheat futures are also below the 20-day moving average support level and are trading at lowest levels since June 1
  • Funds bought about 1,000 contracts of CHI wheat yesterday

CATTLE

  • June lives up 0.70 @ 97.30, August lives down 0.17 @ 96.30, October lives down 0.52 @ 98.87
  • August feeders down 1.85 @ 130.82, September feeders down 2.00 @ 132.15
  • Choppy cash cattle trade so far this week from 98.00-108.00
  • Choice beef values are still falling quickly
  • Increasing slaughter and heavy weights will continue to add to beef inventory in the summer months
  • August lives are still range bound, and held the lower Bollinger Band level as support early in the session
  • Nearly oversold stochastics
  • August feeders have broken below the recent trading range

HOGS

  • June up 0.15 @ 48.00, July down 0.57 @ 52.22, August down 1.12 @ 54.70
  • Cash hog markets are still trending lower
  • Pork values have been choppy to lower
  • Hog slaughter drawing very close to year-ago levels
  • China spot pig prices are up over 2% for the week so far
  • July futures are still deeply oversold though the trend lower is still intact
  • August hogs are trading below their 10 and 20-day moving average support levels and a close below both would be the first since June 3