News Source: SPC
Top Farmer Closing Commentary 11-16-18
CORN HIGHLIGHTS: Corn futures finished with modest losses today as Dec was down 2-3/4 cents to 3.64-3/4, while Mar was down 2-1/2 cents to 3.75-3/4. For the week, Dec corn futures dropped 5 cents, while the Mar contract posted a 5-1/2 cent loss. Corn futures continue in their sideways trading fashion, pushing at the bottom of the trading range in today's trade. Overall news has stayed relatively quiet, with the exception of the USDA weekly export inspections today. The USDA announced weekly export sales at 35.1 million bushels and 43.8 million bushels of shipments. This puts total exports currently at 91% of last year's levels, and commitments up 15% of last year's pace. Both these numbers are ahead of the USDA estimated averages, and stay as a bullish factor underneath the corn market, given the demand. Corn harvest is in the last leg, and weather maps across the majority of the Corn Belt are staying relatively dry with the exception of some snow moving across the northern tier over the next few days. Technically, corn futures are challenging support levels, but with Mar holding 3.75 in today's trade, despite being pressured early, keeps some encouragement that support levels may still hold. Seasonally, corn prices tend to start to work higher from now until early June. At this stage, with concerns regarding trade, as well as more than ample supplies of corn, the market is likely to move anywhere fast.
SOYBEAN HIGHLIGHTS: Soybean futures rallied off of early session lows to finish with mild gains in today's trade. Front month Jan beans were up 3-1/2 cents to 8.92-1/4, while the Mar contract gained 3-1/2 cents to 9.05. For the week, Jan beans posted a 5-1/2 cent gain, while the Mar contract was 5-3/4 cents higher. Bean futures saw early selling pressure as the Jan contract pushed to a low of 8.81-3/4, before a comment from President Trump on the news lines regarding trade with China quickly sent buyers into the market. He made statements that were favorable in the direction of working on a potential trade deal with our largest importer of soybeans, but still much work to do. Regardless, it still set the market into positive territory with a more positive tone as we move towards a key meeting between the two leaders at the G20 summit the last week of November in Argentina. On the news front, the USDA posted this week's export sales numbers and shipments with 17.3 million bushels of sales, and 49.9 million bushels of shipments. Currently, total exports are down 42% from a year ago and total commitments are down 32%. As evident, China remains absent from the market, only at this stage, purchasing 3% of their total from last year. Strength was seen in the market in the soybean meal export side as commitments were at 21% above last year's levels, and crush margins have kept support in bean prices as the meal export market remains favorable. In additional export news, the USDA announced a small sale of 3.7 million bushels of soybeans to unknown destinations for the 2018/19 crop year. In the past handful of days, we have seen multiple posted sales as potential for more favorable trade negotiations, as well as interest from other international buyers seems to be moving forward in this time window. Unfortunately, the window for key export sales is closing, as South American beans are only a few months away.
WHEAT HIGHLIGHTS: Wheat futures were choppy in today's trade, while Chi contracts finished mixed. Front month Dec was up 1-1/4 to 5.06-3/4, while Mar gained 1/2 cent to 5.15-1/4. All remaining deferred Chi contracts saw small losses in today's trade. Other wheat varieties were mixed in their trade as KC Dec hard red winter wheat contract was up 2-3/4 cents to 4.82-3/4, but Mpls spring wheat Dec was down 3-1/2 cents to 5.71-1/4. For the week, Chi Dec contract gained 4-3/4 cents while the Mar contract was also 3 cents higher. Much of the focus has been on the KC winter wheat contracts, as before today's trade, the front month contracts moved into 2018 lows. Despite weakness in the futures markets, cash prices have stayed firmly sideways, as local demand has stayed strong. The biggest key going forward, will be the shift of export demand to U.S. exporters with a potentially tighter global supply picture. The USDA put last week's export sales and shipments at 16.1 million bushels of sales and 9.7 million bushels of shipments. These are considered to be bearish amounts that have wheat exports currently down 20% from last year's levels and still trading below USDA targets. The strength may be also moving into the KC hard red winter wheat contracts as weekly crop ratings sold 54% of their futures crop in good to excellent condition, while planting was at 89%, still trailing the 5-year average. The biggest question is 89% of what acres are still unknown given less than favorable weather for this year's planting window as heavy rains came through in early fall, with a quick turn to winter in the past few weeks.
CATTLE HIGHLIGHTS: Cattle markets were mixed today as front month Dec gained 0.20 cents to 115.35, while Feb cattle was up 62 cents to 119.725. For the week, Dec cattle gained 0.775 cents, while the Feb contract posted a 1.925 gain. Feeder cattle futures saw selling pressure today as front month Jan lost 1.325, but still finished 2.725 higher on the week. Trade stayed mixed today, as the market was looking for direction from cash trade, as well as retail values. Strength in the hog market did provide some spillover support in the cattle futures today as front month hogs did finish limit higher. Cash trade this afternoon was starting to see some development with trade near 114.00 in TX, which would be relatively steady to slightly softer than last week's values. In addition, dress trade was seen at 178.00, slightly softer than last week. Midday retail values were softer, with choice carcasses down 0.22 cents to 213.33, while select carcasses were 0.02 cents lower to 197.56. Over the course of the week, carcass values seem to have stabilized, and have been trending slightly firmer as we move towards late afternoon. In other news, weekly export sales were announced this morning at 13,600 metric tons for last week, up 18% from the previous week but still below the 4-week average. Overall, beef sales have continued to run strong this year, and with current levels of supplies available, the demand pace moving into 2019 will be a key to support price.
LEAN HOG HIGHLIGHTS: Lean hog futures surged higher in today's trade as front month Dec finished limit higher to 60.075, Feb and Apr hogs also finished limit higher with the Feb contract closing at 66.75. For the week, the Dec contract showed good strength finishing 4.275 higher, while the Feb contract had a strong week posting a gain of 7.25. Strength was seen throughout the entire pork complex as Jun, Jul, and Aug contracts posted new contract highs today as money continues to support the hog market. A combination of trade news being more favorable with China, as well as ongoing concerns regarding African swine fever within that nation, helped bring more buyer support in the hog market again today. During the course of the trading day, a friendlier tone has been established between the U.S. and China regarding trade and the tariffs seen on agricultural products. While at this stage things can still change very quickly, the fact that U.S. and Chinese negotiators are talking is considered favorable overall. The growth of African swine fever continues to be a major focus of the market, as today was reported that a wild boar found in the Sichuan province, which is the country's top producing region for pork. Continued reports show that this disease may still be the tip of a large iceberg that is still developing, and evidence that ASF is not under control within Chinese borders. The market is seeing strength on potential exports of U.S. pork to China to meet the void of hogs being affected by the disease, those stages are not evident yet. The USDA announced weekly pork exports of 20,500 metric tons for last week, down 3% from the previous week but still 14% above the 4-week average.
Top Farmer Midday Update 11-16-18
Corn: Corn futures are trading slightly lower this morning, with Dec down 3 cents to 3.64-1/2, Mar down 3-3/4 cents to 3.75-1/2, and May down 2-3/4 to 3.83. As perceptions on U.S./China trade talk continue to shift, corn markets face pressure due to the acreage decision for next year's crop. A lack of progress on the China front is seen as discouraging soybean acres and encouraging corn acres. On this morning's Export Sales report, a total of 892,500 tons were reported sold for the week ending November 8. This is up 27% from last week and up 95% from the previous 4-week average. Still, the nearby Dec contract is trading below its 50-day moving average for the first time since October 31. During yesterday's session, funds were net even in corn, and are still net long about 16,000 contracts.
Soybeans: Soybean futures are moderately lower, with Jan down 5-1/2 cents to 8.83-1/4, Mar down 5-1/4 to 8.97, and May is down 5-1/2 to 9.10. Prices are still holding onto the 10-day moving average support levels, but a shift to a slightly more negative perception about U.S./China trade talks is pressuring prices. NOPA data yesterday was mixed. Soybean oil stocks were higher than expected, higher than last October's stocks, but October was the sixth consecutive month of lower soybean oil stocks. On this morning's Export Sales report, a total 470,400 tons were reported sold for the week ending November 8. This is up 47% from last week and up 54% from the previous 4-week average. In addition, exporters sold 100,000 tonnes of beans to unknown destinations this morning. Funds bought 3,000 contracts of soybeans yesterday leaving their net position short about 52,000 contracts.
Wheat: Wheat markets are choppy this morning with Dec Chi wheat up 3/4 cent to 5.06-1/4, Dec KC wheat up 1-1/4 cents to 4.81-1/4, and Dec Mpls wheat steady 5.74-3/4. Chi wheat is at the low end of a long term trading range, but cannot seem to get any momentum built up higher. Meanwhile, the hard red winter wheat markets are continually making new lows for the move. In fact, the Dec KC contract traded at its lowest price since December 13. SOVECON is estimating that Russia will plant 18.2 to 18.4 million hectors next year versus 17.8 million hectors planted this year. 438,000 metric tonnes of wheat were reported sold for the week ending November 8. This was down 34% from last week and down 18% from the previous 4-week average. Funds bought 2,000 contracts of Chi wheat yesterday and are now short 54,000 contracts.
Cattle: Cattle futures are mixed this morning, with Dec lives down 27 cents to 114.87, Feb lives up 10 cents to 119.20, and Apr lives up 7 cents to 121.02. Jan feeders are down 90 cents to 146.95 and Mar feeders are down 55 cents to 144.00. Prices remain well within their recent trading ranges after stabilizing with Tuesday's bullish key reversals. Beef values have been working themselves lower recently, but have not totally collapsed. Average weights jumped 4 pounds last week, but given the hope for steady to maybe even slightly higher cash trade this week, prices are staying range-bound.
Hogs: Hog futures are sharply higher this morning after news broke last night that China's number one pork producing province has officially seen its first African swine fever outbreak. Dec hogs are up 2.30 to 59.37, Feb hogs are up 2.60 to 66.35, and Apr hogs are up 2.52 to 71.27. Because China's pork supply situation is seen as being more urgent than the soybean side of things, hog markets are more able to discount a lack of enthusiasm about trade talks. Pork values are relatively low for this time of year due to record production recently. Still, there is enough uncertainty about African swine fever in China and even parts of Europe that have been keeping speculative money increasing length in hog markets, particularly the deferred months.
Midday Update 10/24/18
CORN: Corn futures are down 1-3/4 cents this morning, with Dec at 3.68-1/2 and Mar at 3.80-3/4. Today's trading range has been very tight with futures unable to make any progress above the 100-day moving average resistance or below the trend line support begun on 9/19. Crude oil markets are higher, recovering a portion of yesterday's losses, but pressure from other gains is keeping corn lower. Momentum indicators appear relatively neutral moving into harvest.
SOYBEANS: Soybean futures are moderately lower this morning, with Nov down 5 cents to 8.52-1/2 and Jan down 5-1/4 to 8.65-3/4. Both of the nearby futures contracts have fallen below their 50-day moving average support so far this morning. Stochastic indicators are nearing oversold levels, but this is mostly due to the sharp drop last Thursday. Meanwhile, the longer term RSI momentum indicator is pointing lower, which could open a door for a resumption of a larger downtrend. China sold some 2013 soybean stocks yesterday, and talk that China may sell 4-6 million metric tons soon would eat into U.S. business. Both soymeal and soybean oil futures are lower this morning, with meal down 1.4%.
WHEAT: Wheat futures are sharply lower this morning, with Dec Chi down 8-3/4 to 5.00-1/4, Dec KC down 8-1/2 to 4.99 and Dec Mpls down 2 to 5.83. The Dec spring wheat contracts have fallen below their Bollinger band ranges, and stochastics are also indicating prices are oversold. However, both Dec winter wheat contracts are holding long term trend line support begun in December of last year. Dec KC futures are trading at a discount to Dec Chi contracts, a somewhat rare occurrence.
CATTLE: Cattle futures are mixed this morning, with Oct lives up 12 cents to 112.90, Dec lives up 12 cents to 117.27 and Feb lives up 7 cents to 122. Oct feeders are down 22 cents to 154.85, and Nov feeders are down 40 cents to 155.47. The stock market is down another 200 points this morning, keeping cattle from rallying too far on the strongest beef prices since early September. Cash trade this week has been steady with the past five weeks, and some believe the Dec premium to cash is too wide considering the expectations for a surge in production for this quarter. Dec live cattle futures have traded between their 10 and 20-day moving average levels for the most part this morning, keeping prices choppy and without much direction.
HOGS: Hog futures are up sharply this morning, with Dec up 2.27 to 56.80, Feb up 2.05 to 63.47 and Apr up 1.90 to 69.52. Short covering is likely responsible for a solid portion of the bounce this week, as prices dipped into oversold levels with African swine fever issues still popping up in China. Dec hogs are trading at a wider than normal discount to cash for this time of year. While expectations for speeding up production may justify this, the market seems uncomfortable holding a wider than normal discount with so much uncertainty down the road.
Top Farmer Midday Update
CORN: Corn futures are trading 1-1/2 to 2 cents higher, as prices are reflective of expectations for good export activity this week, rain delaying harvest toward the end of the week and a lack of farmer selling after prices corrected downward last week. Export inspections at 37.4 million bushels were considered supportive.
SOYBEANS: Soybean futures are trading with small gains of 2-4 cents. Traders buying beans and selling wheat may be a feature, but expectations of strong harvest progress will likely keep prices in check for now. Forecasters seem split on rainfall totals toward the end of the week, but the 6-10 day outlook on Wednesday and Thursday of last week indicated above normal precipitation for entire Midwest. This creates problems. Weekly export inspections at 42 million, while large, was about half of last year's for the same week. To date, inspections at 218 million bushels are down 40% from a year ago, which could partly be reflective of poor harvest weather a year ago.
WHEAT: Wheat futures are trading softer with losses of 3-7 cents on all three exchanges. Lack of positive news and a poor technical showing is weighing on prices today. This doesn't seem untypical for a Monday in the wheat market lately, where a lack of positive news allows an almost void in which prices to drop. Prices are still within their range the past two months, and we do not expect any significant changes. Export inspections at 14 million bushels were termed neutral to negative.
CATTLE: Cattle futures are trading 10-90 higher at midday with expectations for steady demand to provide underlying support. Product values are expected to trade higher early in the week as well. The technical picture looks friendly today, with prices holding the 40-day moving average on Dec cattle on Thursday, while Friday's trade activity was termed an inside trading day. Today's higher opening is a reflection of buy stops being triggered once prices pushed above the 21-day moving average. Bigger supply expectations would suggest prices probably are not poised to move higher.
HOGS: Hog futures are trading 17-80 points higher in line with gains in the live and feeder markets. The entire livestock complex has a firm undertone, even though we are sure there is a good cause or expectation. Perhaps the biggest supporting factor is that the hog index is at 67.22, near 15.00 above the Dec futures.