News Source: SPC
Top Farmer Closing Commentary 3-20-19
CORN HIGHLIGHTS: Corn futures ended the day once again with little change. Nearby May gained a 1/4 cent closing at 3.71-1/2, while new crop Dec gained a 1/4 cent closing at 3.95-1/2. Dec experienced a 3 cent trading range and May 3-3/4. Volatility remains historically low and prices continue to grind in a sideways pattern awaiting further news to provide direction. Sharply higher livestock prices, in particular pork, would suggest that pork production could likely be on the rise and that expansion over the 12-24 months on the increase. Ultimately, it means more feed supply. A rough weather environment the last 6 weeks too should increase feed supply. We believe corn prices are well supported.
SOYBEAN HIGHLIGHTS: Soybean futures edged higher with small gains of 1-2 cents as May closed at 9.06, gaining 2, and Nov at 9.40-1/4, also gaining 2 cents. Today's trading range was minimal with contracts within 7 cents from low to high. Strength in wheat helped provide underlying support, as did a positive comeback in corn. Otherwise new news of consequence was lacking. The market continues to hold its breath waiting for news on the tarrif front. Some think an agreement could be had by the end of the month. Others are suggesting that it will take until June or beyond. Whatever the case, the Brazilian and Argentine crops continue to chug along and have stabilized or improved. That along with continued competition for export business and the slow paced export sales this year continue to act as overhead resistance. Yet, bean prices have bent, but they don't break. Nov near 9.50 continues to hold, give or take 10 cents.
WHEAT HIGHLIGHTS: Wheat futures had an impressive showing today gaining between 6 and 8-1/4 cents in both Chi and KC with the nearby May contracts leading the way higher. Most impressive was a close above the 21-day moving average, something that has not occurred since early February. This might suggest that the tide of momentum is turning and wheat is beginning to pick up more buying interest on ideas that export activity will in fact pick up. By some accounts, U.S. wheat may be some of the cheapest, if not the cheapest, on the world market. Mpls gained 5 to 6 cents on continued concern that spring will be off to a late start. With a very impressive technical picture beginning to show if prices closed above the 40 and 50-day moving average today, for the first time since February 1. The 100-day moving average acted as overhead resistance. Positive relations between the U.S. and Brazil are noted as Brazil's president agreed to allow 750,000 tons of U.S. duty-free wheat into its country. This, well not a significant amount, nonetheless, is a positive event and something for which the market has been starving.
CATTLE HIGHLIGHTS: Cattle futures closed higher again today, extending their recent rally with impressive beef demand and poor feedlot conditions. Apr lives closed 45 cents higher today at 129.57, Jun lives closed 65 cents higher to 123.37, and Aug lives closed 60 cents higher to 119.32. Apr feeders were up 52 cents to 148.32, May feeders were up 1.60 to 152.12, and Aug feeders were up 1.95 to 157.52. Choice beef values closed 1.00 higher yesterday to 229.33, their highest value since May 23. Beef values slipped this morning, down 71 cents to 228.62. However, retail pork values have been rallying sharply with the African swine fever situation coming to a head, so we expect beef values to reflect the strength in meets. Flooding has been, and will continue to be, a major issues in cattle country. Not only are cattle stressed, but slaughter is also down. Slaughter last week was down 1.3% from a year ago, and beef production was down 2.3% from a year ago. Friday's Cattle on Feed report is expected to show placements down 4% from last year, marketings up .8% from last year, and on feed supply down .3% from last year. Apr and Jun futures traded within yesterday's ranges for all of today's session, they were still able to muster positive gains. The Aug contract matched yesterday's highs, while Oct and Dec made new contract highs. Feeder markets are surging out of their recent trading ranges, with the May contract making its highest close today since October 9, and the Aug contract making new contract highs.
LEAN HOG HIGHLIGHTS: Hog markets saw the second session this week with limit higher gains in all contracts from Apr 2019 to Aug 2019. Apr hogs closed at 73.82, Jun hogs closed at 90.25, and Jul hogs were at 93.07. The CME lean hog index is up 1.00 to 57.54, its highest value since January 31. Carcass cutout values closed 1.75 higher yesterday afternoon to 74.14, their best value since November 5. Pork values were up another 35 cents this morning to 74.45. Some estimates have been reported as high as 30% of the China hog herd has been destroyed in African swine fever containment efforts. Actual numbers are not known. Tomorrow's export sales report will be watched closely to see if China has kept up with their large purchases of U.S. pork products. The Apr hog contract closed at new highs today, eclipsing previous highs from November 20. Jun, May-July 2020 contracts also made new highs today.
Top Farmer Midday Update 3-20-19
Corn: Corn futures are low this morning, in very quiet trade within yesterday's ranges. May corn is down -1/2 cents to 3.69-3/4, Jul corn is down 1-1/2 cents to 3.79-1/4, and Dec corn is also down 1-1/2 cents to 3.93-3/4. Conflicting opinions about the current state of U.S./China trade negotiations should keep price action choppy. There were reports yesterday that China has been backing away from previously made concessions, while other sources were reporting that U.S./China negotiations were in their final stages. Nonetheless, USTR Lighthizer and Treasury Secretary Minuchin will be flying to Beijing for negotiations next week with negotiations in Washington coming the following week. Ethanol prices are near 7-month highs due to logistical issues created by flooding. Technical price action today has been very quiet with the Dec futures contract still holding support at the 24% retracement of its May highs to Sep lows. On Tuesday, funds sold about 7,000 contracts of corn, and their thought to be short about 236,000 contracts.
Soybeans: Soybean futures are slightly lower this morning, with May down 1-1/2 cents to 9.02-1/2, Jul is down 1-1/4 cents to 9.16-1/4, and Nov is down 3/4 of a cent to 9.37-1/2. Soybeans found sellers today after three unsuccessful tests in a row of their 20-day moving average resistance levels. Despite a negative opening, prices have been able to hold tight near their recent ranges. Flooding conditions in many parts of the country, along with forecasts for more rain over the next week or so is creating more concern that the anticipated acreage shift this year to corn may be somewhat restricted. This could add to an already bearish supply and demand setup. Speculative funds sold 4,000 of beans yesterday and our thought to be net short about 88,000 contracts.
Wheat: Wheat markets are moderately higher today, but tempting to push though some overhead technical resistance on positive fundamental developments. May Chi wheat is up 2-1/2 cents to 4.59, May KC wheat is up 3-1/4 cents to 4.39, and May Mpls wheat is up 2-1/4 cents to 5.67-1/2. Spring wheat continues to benefit from flooding conditions in North and South Dakota. Chances that Spring Wheat planting will be delayed is growing significantly. Winter wheat futures are up today as well, partly on crop condition concerns from possible damage done with storms last week. In addition, President Trump met with the Brazilian President Bolsonaro yesterday with agricultural trade a central issue. Brazil will now allow the U.S. to export 750,000 tons of U.S. wheat to Brazil with no tariffs. Brazil is the largest wheat importer in South America, so any business that the U.S. is able to earn would be very positive. During yesterday's session, funds sold about 2,000 contracts of wheat in Chi and are thought to be net short about 70,000 contracts. As of the most recent available data, funds are holding an all-time record net short position for combined wheat contracts.
Cattle: Cattle markets are mixed to mostly higher this morning, with Apr lives up 22 cents to 129.35, Jun lives up 15 cents to 122.87, and Aug lives up 17 cents to 118.90. Apr feeders are down 35 cents to 147.45, and May feeders are up 97 cents to 151.50. Weight and production continue to drop due to flooding conditions, particularly in NE. Flooding will also impact placements down the road as well. Beef values continue to rally, also providing demand side support. Aug lives are moving towards the higher end of their most recent trading ranges, Jun and Aug are moving steadily higher within yesterday's ranges, and the Oct and Dec live cattle contracts have made new highs yet again. Cattle prices are also drawing spillover support from the hog markets, up sharply again today.
Hogs: Hg futures are making triple digit gains again today, with APR up 1.72 to 72.55, Jun is up 1.62 to 88.87, and Jul hogs are up 1.87 to 195.00. Apr hogs are trading at their highest levels today since November 23, while Jun, Jul, and Aug contracts have pushed above Monday's range to make new contract highs. Retail pork values are quickly gaining value in production and IA and MN may be contracting due to logistical issues caused by flooding. Technically, futures are severely overbought, this does not necessarily mean prices are ready to turn around. There is plenty of uncertainty currently being traded due to African swine ever to keep the trend higher.
Top Farmer Midday 3-5-19
Corn: Corn futures are slightly higher this morning so far, trying to push through some nearby resistance levels. Mar corn is up 1 cent to 3.66, May corn is up 1 cent to 3.75-3/4, and July corn is up 1-1/4 cents to 3.84-1/2. Dec corn is up 1-1/4 cents to 3.97. With below normal temperatures and above normal precipitation forecasted through March 18th in the Midwest, talk of a late spring and delayed corn plantings continues to swirl. In addition, a growing sense of optimism about U.S. trade negotiations is very supportive, with some expecting Chinese purchases of up to 5 to 8 million tons of corn from the U.S. if a trade agreement is reached. Of course, this is just speculation, but the talk is there. Technically, the nearby corn futures are trading near the highs of the day and well of the session lows. New crop Dec corn is trying to push through its 10-day moving average resistance level. During yesterday’s session, funds bought about 2,000 contracts of corn and are thought to be net short about 129,000 contracts.
Soybeans: Soybean futures are struggling to find buyers on yesterday’s positive, though not necessarily strong closes. Mar beans are down 5-1/2 to 8.97-3/4, May beans are down 6-1/4 cents to 9.09-3/4, and July beans are down 6-1/2 cents to 9.23-1/2. New crop Nov soybeans are down 6-1/4 cents to 9.44-1/4. South American weather continues to be beneficial for the soybean crop, keeping some of the enthusiasm at bay. Calendar spread weakness was also noted yesterday, with the May/July soybean spread closing at contract lows. It appears as though most of today’s weakness is tied to yesterday’s disappointing closes. While prices did gain 4 to 5 cents on the day, the nearby Nov contract only finished 3 cents off the day’s lows after trading with intraday highs as much as 10 cents off the day’s lows. During Monday’s session, funds bought 4,000 contracts of soybeans and are thought to be net short about 57,000 contracts.
Wheat: Wheat markets are trying to gather themselves after recent weakness. May Chi wheat is up 2-1/2 cents to 4.58, May KC wheat is up 2-1/4 cents to 4.45-1/4, and May Mpls wheat is up 1-3/4 cents to 5.53-3/4. Black Sea prices for Russian wheat for Mar delivery were reported at 226.00 per ton FOB by the end of last week. This is a drop of 8.00 from the previous week. Another Moscow based trade house recorded Russian FOB prices down 5.00 for the week at 235.50 per ton. Given world wheat’s price weakness, it shouldn’t be much of a shock to see U.S. prices down. However, technicals are very oversold, and given a less than ideal winter and extremely low winter wheat acres in the U.S this year, there still could be some upside later on. Funds sold 2,000 contracts of wheat on Monday and are thought to be net short about 78,000 contracts.
Cattle: Cattle markets are mixed to mostly lower on follow through pressure this morning. Apr lives are up 30 cents to 128.65, June lives are steady at 119.80, and Aug lives are down 5 cents to 115.70. Mar feeders are down 32 cents to 140.87, and Apr feeders are down 35 cents to 144.67. Apr live cattle closed just above their 20-day moving average support level yesterday afternoon. Prices opened up below that line this morning, but have since climbed back above. June lives showed similar price action, closing just above their 10-day moving average yesterday, then starting below this morning. Momentum indicators are pointing lower, but extremely difficult weather for weight gain makes sellers a little more hesitant to take action. While live cattle are still very close to contract highs, feeder contracts are creeping towards the low end of their recent ranges.
Hogs: Hog markets are up this morning, drawing solid buyer interest on improving cash fundamentals. Apr hogs are up 1.10 to 58.42, Jun hogs are up 1.22 to 76.40, and Jul hogs are up 1.02 to 78.60. Carcass bellies have begun to bounce, with pork production last week coming in less than 2% above last year’s pace. This is a welcomed development considering production has been running 5% to 7% ahead of last year’s pace. Apr hogs have moved through their 20-day moving average level for the first time since January 18th and a close above would be the first since January 10th. The summer month contracts are near the top ends of their recent trading ranges with Jul hogs just below their 200-day moving average resistance level.