News Source: SPC
Top Farmer Closing Commentary 7-20-18
CORN HIGHLIGHTS: Corn futures ended near the high of the day and with solid gains of 3-1/4 to 4 cents as futures closed higher for the fifth consecutive session. The bullish key-reversal established last week on July 12, the day of the USDA report, looms larger as the potential bottom, with prices closing back above the 21-day moving average today for the first time since May 29. Thoughts that crop ratings may have peaked and could decline again next week, in particular in areas that are hot and dry, along with growing concerns that crops could be diminished in Europe and the Black Sea Region due to warm and dry conditions, help provide for a turnaround this week. In addition, technical traders would argue that this week's trade activity had prices closing back above a downward channel line, suggests that a low may be in place, if not for the long-term at least in the near-term. With Dec corn closing at 3.59, this indicates a gain of 14-1/4 cents for the week.
SOYBEAN HIGHLIGHTS: Soybean futures edged higher today, gaining 3 to 3-1/4 cents with Nov closing at 8.64-3/4, after reaching a high today of 8.68-3/4. Prices finished near the high end of today's trading range which was close to 12 cents on most futures contracts. For the week, Nov soybeans finished 34-1/2 cents higher and well off the most recent low of 8.26-1/4, which occurred on Monday, July 16. A lack of farmer selling, good demand, and expectations that the crop ratings may have peaked helped provide underlying support. The backdrop to supportive prices may also be the idea that U.S. beans, with a tariff in place, are priced similar to Brazilian beans available for export. In other words, nothing new to drive prices lower.
WHEAT HIGHLIGHTS: Wheat futures had another day of solid gains with Chi gaining 11 to 12-3/4, KC 11 to 12-1/4, and Mpls the big winner at 14 to 18 higher as Sep led today's rally closing at 5.55. Heavy technical short-covering in all three markets were noted as reports continue to surface by the end of this week of continued hot/dry expectations in Europe and the Black Sea Region, in which wheat production is expected to be lower. Parts of Russia are also looking at a down year for production and now are hampered by areas of too wet for harvest. Some harvest delays are occurring in the U.S., but overall, we expect to continue to hear good soft red winter wheat results. Sep Chi closed at 5.16, above the 100, 40, and 50-day moving averages, something that has not occurred since mid-June. Prices also closed at their highest level today since June 14. Short-covering was a primary feature, but the catalyst behind the recent turnaround continues to be weather concerns and harvest delays in the U.S. Lastly, growing concern that a dry weather pattern in eastern Australia this past year will continue for at least a couple more months, which could affect upcoming production. Spring wheat, however, the big winner today on higher prices, may be more reflective of dry weather concerns in the Northwest, specifically parts of Oregon.
CATTLE HIGHLIGHTS: Cattle futures ended the week with a mixed session, but weekly gains were impressive. The nearby Aug contract closed 2 cents higher and 4.37 higher on the week to 108.92, Oct closed 40 cents lower today and 2.87 higher on the week to 110.25, and Dec closed 22 cents lower today and 2.80 higher on the week to 114.20. Traders were concerned today that despite cash trade at 110.50 today, trade in the country next week could turn negative. Choice beef values closed 31 cents lower yesterday afternoon to 204.49 and were down another 57 cents today to 203.92. The choice/select spread is currently at 7.17, a bearish factor. Today's Cattle on Feed report was in line with expectations, though still heavy. Placements at 101%, marketings at 101%, and on feed at 104% were all even with expectations. Technically, today's price action was not necessarily bearish, but the setup does not look friendly for next week. The Aug and Oct contracts tried and failed again to close above their 200-day moving average levels for the third session in a row. With the heavy Cattle on Feed report, cattle futures look likely to trade lower for the beginning part of next week.
LEAN HOG HIGHLIGHTS: Hog futures made yet another round of new lows today, with the Aug contract down 80 cents to 66.45, Oct down 95 cents to 51.27, and Dec down 95 cents to 45.92. The 3-near month hog contracts lost between 3.70 and 4.50 this week. Carcass cutout values were up 34 cents yesterday afternoon to 82.69, but lost 1.83 this morning to 80.86. Hams were down 2.10 to 51.93, and bellies were down 11.11 to 162.38. It is somewhat interesting that grain traders seem to have some optimism about the current U.S./China trade spat, while those trading hogs cannot seem to build an ounce of optimism. On the other hand, there is still much uncertainty about trade issues with Mexico and Canada that worries hog producers. In addition, pork production is ramping up, along with the seasonal tendencies and hog numbers are enormous. Technically, the new lows are unfortunately nothing new. The Dec contract has not been able to close above the 50-day mark since last Friday, and short-covering remains one of the only hopes for a bounce barring trade news.
Top Farmer Opening Calls 7-20-18
CORN: Corn futures are weaker with Dec down a penny to 3.64 while holding onto the contract’s 20-day moving average. The 40-day is at 3.81-1/2. The USDA confirmed that export sales of U.S. wheat and corn to Argentina that were reported in its weekly export sales report on Thursday were incorrect; the agency would not disclose further details about the error; USDA will correct the erroneous sales in its weekly report on July 26. After making a new high yesterday, the dollar is down 54 points, crude is up 23 cents, while mirroring upward movement in corn prices this week.
SOYBEANS: Soybean futures opened 4 lower to 8.57-1/2 in the Nov contract. There was a flash on the wires that said Trump was ready to put tariffs on $500 bil of Chinese imports. This saw beans back off after trading as much as 7 cents higher late in the overnight session. Except for soyoil, markets are generally higher for the week so far, however, crushing margins had a rough week.
WHEAT: Wheat futures are higher and have begun trending higher near-term while generally trying to recover from recent lows back to pivotal price areas. Sep CBOT wheat is up 4 to 5.08-1/2. Since June 19, the contract wheat has been consolidating in a neutral range between major resistance at 5.16-1/4, the July 6 high and major support at 4.71- 1/4, the July 11 low. Tuesday's gains above key short-term moving averages give the near-term technical edge to wheat bulls within that larger range. Sep KC wheat is up 5-1/2 cents to 5.02; and Sep MPLS wheat is up 6 to 5.42-3/4.
CATTLE: Cattle futures opened flat/weak ahead of today’s Cattle on Feed report due out after the close with estimates for on feed at 104.1, Placed in June at 101.3; and marketed in June at 100.8. Aug live cattle are down 0.200 to 108.700, Oct down 0.175 to 110.475; and Aug feeders are down 0.375 to 154.075.
HOGS: Hog futures opened weaker with nearby Aug hogs down 0.450 to 66.800, Oct down 0.525 to 51.650, and Dec down 0.425 to 46.425.
Top Farmer Midday Update 7-19-18
CORN: Corn futures are trading 3 to 4 cents higher at mid-session today, finding solid support from wheat futures. Dec corn is up 3-3/4 to 3.64-3/4, and prices are trying to test their 20-day moving average resistance levels. Crude oil is also higher, offering some spillover buying support.
SOYBEANS: Soybean futures are trading slightly lower at midday, with Nov down 1-3/4 cents to 8.56. Without much in the way of new supportive news, prices are having trouble building momentum either way. While the Nov contract has traded above its 10-day moving average today, a close above it might be a little too much to ask without some news or weather-based buying catalyst.
WHEAT: Wheat futures are sharply higher this morning, with the Dec Chi contract up 9-3/4 to 5.20-1/2, Dec KC wheat up 9-1/4 to 5.22-1/4, and Dec spring wheat up 8 cents to 5.54-1/4. Wheat prices are approaching the top of their recent trading ranges, as the market grows increasingly concerned with production issues in Europe and the Black Sea Regions.
CATTLE: Cattle futures are trading very slightly lower at midday today, struggling to push through overhead resistance at the 200-day moving average levels. The Aug contract has not closed above its 200-day moving average level since mid-March, and the Oct contract has never closed above its 200-day moving average level. Sellers are defending these resistance levels with impressive strength, especially considering friendlier-than-expected cash trade this week.
HOGS: Hog futures are trading moderately higher today, as many shorts are likely taking profits in a severely distorted market. Traders are likely unwinding long cattle/short hog spread positions, as well. Current hog markets have been unable to find any stabilizing action since China tariffs were announced, so many hope that today's price action will begin some bottoming.
Top Farmer Closing Commentary 7/2/18
CORN HIGHLIGHTS: Corn futures had one of their roughest sessions of the year, finishing with losses of 11-1/4 to 12-3/4 cents. Jul led today's drop, closing at 3.37-1/2, a new low close as well as a new low for the year. New crop Dec closed 12-1/4 lower, taking out the low from 6/19 at 3.60 with a low today at 3.58-1/2 before closing at 3.59. Failure to push through the 10-day moving average when prices were in positive territory last night and good rains in parts of the Midwest, along with a somewhat benign 6-10 day outlook, seemed to be enough to put traders on the defensive. A lack of progress in tariff talk, as well as good weather on tap, has traders defensive into the holiday. We also think that many traders have moved out of the market and are standing on the sidelines. Without buy orders underneath, trend-following speculators and funds were selling contracts, pushing prices lower, searching for buy orders.
SOYBEAN HIGHLIGHTS: Soybean futures traded both sides of steady but eventually came under pressure as heavy selling in corn and wheat likely dragged beans lower, which ended the day 10 to 10-1/2 lower. Nearby Jul lost 10, closing at 8.48-1/2, a new contract low close. Nov lost 10-1/2, closing at 8.69-1/2, a new contract low close, but futures managed to hold the low from 6/19 of 8.64-1/2 with today's low of 8.66-1/4. A firmer US dollar, good weather and technical selling continued to weigh on futures as did tariff talk or lack of progress with tariffs. The tariffs are expected to kick in 7/6, and unless something happens quickly, these will become a reality, and consequently an additional anchor pulling on prices. With the 7/6 tariff looming large, futures were unable to hold onto positive territory near midsession and continued to reflect estimates for a big crop and growing concern that tariffs will hinder exports in the year ahead and potentially increase production out of South America. Export inspections at 31.2 million were viewed as supportive, but this failed to gain much traction as prices reflected more general weakness and additional speculative selling as the trend remains down.
WHEAT HIGHLIGHTS: Wheat prices finished with losses of 17-21 cents in Chi and KC. Mpls lost 9-1/2 to 10 cents. Mpls continues in a downtrend, breaking into new lows today after failing to hold onto gains Friday and then again this morning with Sep futures closing at 5.27, well off the recent highs of just over 6.50. Export inspections at 11.9 million bushels were considered negative and may have helped pressure prices, as year-to-date totals indicate a 47% decline from a year ago. The USDA is projecting a 6% increase. In other words, this is not off to a good start. Volatility has been high with prices regularly trading 15-20 cent ranges. With sharp losses in corn and soybeans, there may not be much, if any reason to be overly optimistic that wheat prices would be able to hold together. A firmer US dollar was also a likely culprit, as the uptrend remains intact. After a weak session Friday, the dollar made back most of those gains today.
CATTLE HIGHLIGHTS: Cattle futures finished mixed, though price action was not friendly. The nearby Aug live cattle contract closed 17 cents higher to 106.90, Oct closed 17 cents lower to 109.85, and Dec closed 7 cents higher to 113.77. Feeder cattle futures finished more positive with Aug up 60 cents to 151.92 and Sep up 1.17 to 152.12. The fundamental side of cattle markets was mostly neutral to bearish for today's session. Extremely hot temperatures over the weekend were viewed as neutral. While some heat stress was likely, the hot temperatures also stifled retail beef demand. Choice beef values put in their lowest close on Friday since 4/20 at 211.96. Choice beef was down another 8 cents at mid-session to 211.88. Expectations for cash trade are lower, as evidenced by the weak Aug closed today. Last Friday, Aug futures squeezed out most of their discount to cash, so the bearish supply outlook put a lid on the early technical buying today. The Oct futures contract made an unsuccessful test of its 200-day moving average resistance level. Buyers were unable to maintain control of the market today in the face of questionable export prospects and a heavy supply picture.
LEAN HOG HIGHLIGHTS: Hog futures compounded recent losses today with the Jun contract up 32 cents to 83.20, Aug was down 2.07 to 74.37, and Oct was down 1.20 to 58.57. Sellers were active on last week's bearish Hogs and Pigs report. Carcass cutout values closed 21 cents lower on Friday to 87.38 but were up 45 cents this morning to 87.83. This was moderately supportive for today's session. The CME lean hog index was down 63 cents to 83.69, a stabilizing force for the nearby Jul contract. A lack of resolution on trade deals with Canada, Mexico and China continues to pressure hog markets. The best traded Aug contract put in a bearish outside day today. New lows were made in the Oct contract, as the greater than expected breeding number from last week's report continues to push the deferred contracts lower.