News Source: SPC
Top Farmer Closing Commentary 9-20-19
CORN HIGHLIGHTS: A lack of new news and an extended warm forecast pressured prices late in the session as futures lost 2 to 3 cents. Dec closed 2 lower at 3.70-3/4, and next Dec 3 lower at 4.02. For the wee, Dec corn gained 2 cents, somewhat of a victory considering a bullish key reversal last week was not met with weaker prices this week. Harvest is getting underway and yield results, while preliminary, are mixed. Some producers are getting better than expected yields while others are finding significant variability between, and even within, fields and generally a lower yield by 10% to 20%. This will likely be the story for this season. Roughly 1 to 2 bil bu of corn is late and a normal frost could have impact. In the very near term we see good weather from a temperature perspective over the next 10 days. It will, however, be very wet and this is beginning to be a growing concern that saturated soils and weak corn stalks could make for less than ideal conditions. On a positive note, export sales were strong this week and last week’s bullish key reversal continues to look encouraging.
SOYBEAN HIGHLIGHTS: Soybean futures had a strong week last week last but gave back 16-3/4 cents with most of that coming today with Nov futures closing down 10-1/4 at 8.82-3/4. The 9.00 area held as resistance this week as futures on Monday traded as high as 9.04-3/4, but closed at 9.00 even. Today’s slide below the 150-day moving average, as well as the 10-day, would suggest the market may be running into technical weakness and harvest pressure could mount in teh days and weeks ahead. We will circle back to the idea that if behind on cash sales, get current with recommendations. If not short futures, we would suggest going short next week to catch up with recommendations, but also use the close at 9.00 as an exit strategy.
WHEAT HIGHLIGHTS: Wheat futures ended the week on a soft note losing 3-3/4 cents in Dec Chi closing at 4.84-1/4, as compared to last Friday’s close at 4.88-1/2. The weekly hook reversal in Chi could be looked at somewhat negatively. Yet, the 10-day moving average held, as did the 40-day, and we would argue this week was nothing more than a consolidation week. KC wheat lost 2 to 3 cents and spring wheat gained 3 to 4 cents as continued woos with harvest exist as wet conditions are keeping the remainder of U.S. spring wheat from being rapidly harvest. Delays in Canada are also being noted. Could this lead to yield loss? Perhaps. As far as the world is concerned, however, ample inventories are the problem for wheat prices i the U.S., as well as the dollar which moved just slightly higher today posting a somewhat impressive reversal. Less than ideal wording from the administration on relations with China late in the week may have weighed on nprices today.
CATTLE HIGHLIGHTS: Cattle markets had a mixed to mostly lower end to the week with Oct lives down 45 cents to 99.35, Dec lives were down 67 cents to 105.15, and Feb lives were down 45 cents to 112.07. Sep feeders were up 37 cents to 140.32, Oct feeders were up 27 cents to 139.20, and Nov feeders were down 22 cents to 137.02. Choice beef values were up 91 cents at yesterday’s close to 69.02 and were up another 1.44 today to 70.46. Average dressed steer weights for the week ending September 7 were reported at 893 ponds, up from 884 last week and down .33% from a year ago. The 5-year average weekly weight for that week is 898.6 pounds. Most of the price action today was choppy and quiet as traders focused on position taking ahead of this afternoon’s Cattle on Feed report. Placements were seen at 91% vs expectations of 94.1%, marketings are seen at 98% vs expectations of 98.3%, and on feed was seen as 99% vs 99.3%. This is the first year over year drop in on feed supplies since the December 2016 Cattle on Feed report. Current cash bid are listed between 101.00 and 102.00, 1.00 to 2.00 higher than last week.
LEAN HOG HIGHLIGHTS: Hog markets had a choppy session today with Oct down 1.52 to 61.40, Dec hogs are up 15 cents to 67.95, and Feb hogs are up 22 cents to 75.05. The CME lean hog index was down 73 cents to 56.76. Carcass values were down 10 cents at yesterday’s close to 68.11, but were up 2 cents this morning to 68.13. U.S./China trade negotiations are apparently making progress which is supportive, especially given that trade issues have apparently been separated from the stickier national security issues. A trade deal with China has potential to increase U.S. pork sales to China extremely quickly. U.S. pork export sales for the week ending September 12 were reported this morning at 14,200 tons vs the previous 4-week average of 21,598 tons. Cumulative sales for the year are up 14.8% from last year and are currently pegged at 1.12 mil tons. The best traded Dec lean hog contract briefly tested its 200-day moving average resistance level today, but was unable to close above it. Dec hogs were able to close above their 50-day moving average level for the fifth session in a row.
Top Farmer Midday Update 9-20-19
Corn futures are trading very slightly higher early today with Dec up 3/4 of a cent to 3.73-1/2, Mar is up a penny to 3.85, and May corn is up 3/4 of a cent to 3.92-1/2. Forecasts for above normal temperatures and above normal precipitation is a bit of a mixed bag for corn price direction. On one hand, the abnormal temperatures are not conducive to an early frost, however, studies have shown that warm weather can shorten the filling and cause smaller ear weights. Basis levels across the country are still strong and many end users are worried about lower test weights on this year's corn. U.S. biofuel credit prices fell 10% ahead of a meeting between President Trump and Senators to discuss biofuel policy. Dec corn has only traded as high today as 3.74 in relatively quiet price action. Stochastics are overbought, though the 10-day moving average has crossed above the 20-day moving average indicating strength. Speculative funds were thought to have bought about 5,000 contracts of corn yesterday.
Soybean futures are just slightly lower early this morning, with Nov down 3-1/2 to 8.89-1/2, Jan beans are down 3-1/4 to 9.02-3/4, and Mar beans are down 3-1/2 to 9.14-3/4. Traders are optimistic about face to face trade negotiations between the U.S. and China especially given the news that a Chinese delegation will be traveling to U.S. farms to see U.S. production ag first hand next week. The national drought monitor released notes yesterday regarding a rapidly intensifying flash drought affecting areas in southern IL, as well as parts of KY, IN, and OH. Nov beans have back tested their 100-day moving average support level for the third session in a row today, and though beans are not currently trading higher, the flag formation could indicate a continuation of the uptrend is coming. Speculative funds bought 6,000 contracts of soybeans yesterday.
Wheat markets are higher this morning again testing nearby resistance levels in a solid uptrend. Dec Chi wheat is up 3/4 of a cent to 4.88-3/4, Dec KC wheat is up 2 cents to 4.11-1/2, and Dec spring wheat is up 8-3/4 to 5.29. Sluggish export sales this week have slowed the trend down, but deteriorating wheat crops in Brazil and Argentina are supportive. More rain in MN and the Dakotas has kept harvest moving at a slow pace, and Canadian spring wheat harvest is also lagging behind. Dec Chi wheat is putting in its sixth test in a row of its 50-day moving average resistance level. A definitive close above it would open a run to 5.00 easily. Dec KC wheat has traded within inside session all day and Dec spring wheat punched through its 50-day moving average level again today and a close above would be the first since June 28. Speculative funds were thought to have sold about 2,000 contracts of Chi wheat yesterday.
Cattle markets are mixed this morning with Oct lives down 5 cents to 99.75, Dec lives are down 37 cents to 105.45, and Feb lives are down 22 cents to 112.30. Feb feeders are up 52 cents to 140.47, and Oct feeders are up 30 cents to 139.22. This afternoon's Cattle on Feed report is expected to show lower on feed supplies than last year for the first time since December 2016. Extremely strong packer margins have kept marketings current and weights low, but the fast production speed has also kept the beef markets relatively choppy. Dec are continuing their consolidation around recent price levels in overbought territory. Oct feeders are also overbought, but are testing their 100-day moving average level for the second session in a row. A close above this would be the first since April 29.
Hog markets are mixed this morning with Oct up 22 cents to 61.62, Dec hogs are down 85 cents to 67.10, and Feb hogs are down 1.00 to 74.05. Weakness in cash market and retail pork values has kept hog markets on the defensive despite expectations for a mass increase in export business later this year. U.S. and China negotiators are working together today toward a trade deal, and any word of progress should be extremely supportive. In the meantime, price direction looks choppy due to the sluggish cash fundamentals. Currently, Dec hogs are holding nearby support at the 50-day moving average level, but there is no clear trend at this time.
Top Farmer Midday Commentary 8-22-19
CORN: Corn futures are lower again today, trading near the low end of the recent consolidation range and contract lows. Sep corn is down 3-1/2 cents to 3.59-3/4, Dec corn is down 3-3/4 to 3.67-1/4, and Mar corn is down 3-1/2 cents to 3.79-1/2. Pro Farmer found MN's average corn yield at 170.4 bu per acre vs 178.7 last year and the 3-year average of 184.2. Pro Farmer found IA's average corn yield at 182.8 bu per acre vs 188.2 last year and 185.4 on average. A survey of IA farmers suggests that corn yield could actually be higher than the Pro Farmer estimate. Farmers are a slow seller of corn and soybeans at the moment, and corn basis remains extremely strong. The negativity seems to have been mostly due to China's increased tariffs on U.S. soybeans. The Dec corn contract has traded as low this morning as 3.65-1/2, just 1-3/4 cents off the contract low. Prices are still oversold, but given that the current USDA carryout estimate is actually higher than it was last year when Dec corn traded as low as 3.42, there could still be some downside lurking. Speculative funds were thought to have bought about 2,000 contracts yesterday.
SOYBEANS: Soybean markets are sharply lower in early trade this morning with Sep beans down 11-3/4 to 8.44-1/4, Nov beans are down 11-3/4 to 8.57, and Jan beans are down 10-3/4 to 8.71-3/4. China imposed an additional 5% tariff on U.S. soybeans in wheat is seen as another blow to the demand side of the balance sheet. The Chinese Yuan dropped to 11-year lows yesterday, also reducing demand for U.S. beans. Forecasts for cooler temperatures will make it difficult for the immature soybean crop to finish strong. IA and MN pod counts sampled on the Pro Farmer tour yesterday were lower than last year and were lower than average. The Nov contract is trading at its lowest level since August 5 and has broken trendline support at 8.65. Momentum has turned back lower, disappointing considering the lateness of the crop and forecasts for cool weather. Next onside target appears to be the nearby lows at 8.54-1/2.
WHEAT: Wheat markets are choppy this morning with Sep Chi wheat up 2 cents to 4.69-1/4, Sep KC wheat is down 2 cents to 3.91-1/4, and Sep spring wheat is up 1/2 of a cent to 4.99. Forecasts for heavy rains in ND and MN over the next week will likely delay spring wheat harvest and could potentially impact quality. Yesterday's strong export sales data helped to strengthen calendar spreads in the winter wheat contracts despite a weak Russian currency pressuring European wheat prices. Sep Chi wheat has punched through its 10-day moving average resistance level for the first time since August 12, and a close above would be the first since August 9. Sep KC wheat made its first close above its 10-day moving average resistance level yesterday since July 15, and a successful test today could open up an additional 15% of near term upside. Spring wheat futures were lower from most of the morning, but have regained buyer interest later in the day. Speculative funds were thought to have bought about 3,000 contracts of wheat yesterday.
CATTLE: Cattle markets are weak in disappointing action today, with Aug lives down 35 cents to 104.62, Oct lives were down 1.87 to 99.22, and Dec lives were down 1.95 to 104.15. Aug feeders were down 95 cents to 137.45, and Sep feeders were down 3.70 to 132.72. Beef markets were not able to put together a solid close yesterday afternoon, though cash cattle are trading a little higher than they were last week. The Cold Storage report released yesterday afternoon was mostly neutral, and such wide swings ahead of this afternoon's Cattle on Feed report are rare and a bit concerning. The best traded Oct live cattle contract fell sharply below its 10-day moving average support level after an impressive move above it yesterday. Feeder markets were met with selling interest almost immediately this morning and are pushing back below nearby support.
HOGS: Hog markets are sharply lower this morning with Oct down 2.77 to 59.52, Dec is down 2.32 to 59.22, and Feb hogs are down 2.05 to 66.52. Negativity this morning is likely due to increased trade tensions with China, but also a somewhat heavy Cold Storage report released yesterday afternoon. Frozen pork supplies were above last year's total, which is no surprise, but the belly stocks that were 37% higher than last year is bearish. Oct hogs gapped lower this morning and are trading at their lowest value since August 2018, while Dec and Feb are holding nearby lows made on August 5. Momentum has turned lower again, but hogs below the 60.00 mark seems cheap.