Stewart-Peterson Market Commentary

Closing Commentary - September 20, 2018

Top Farmer Closing Commentary 9-20-18

CORN HIGHLIGHTS: Corn prices saw some additional follow-through buying in today's session as contracts finished from 4-6 cents higher. Front month Dec was up 6-3/4 to 3.52-1/2, while Mar was up 6-3/4 to 3.64-3/4. Spillover support from a strong move in soybean futures helped fuel a corn rally again this afternoon. The market talk has prospects for Argentina looking to raise their export taxes on corn, soybeans, and wheat to 30%. This helps provide buyers ammunition to move higher today. In addition, wet weather across northern portions of the Corn Belt are being closely watched to determine if possibly some harvest delays may be in place, or quality concerns. Portions of IA and MN are receiving multiple inches of rain and may cause lodging issues, possibly burdensome on crop quality. Today's move in Dec corn futures traded back through the 3.50 per contract level, which is a key psychological level. With today's trade, corn futures are now firmer on the week, and tomorrow's trade action puts the prospects of a weekly hook reversal on those charts.

SOYBEAN HIGHLIGHTS: Soybean futures were the strength of the grain markets today, as contracts finished with strong gains of 19-20 cents. Front month Nov beans traded back above the key psychological 8.50 level, up 20-1/4 cents to 8.50-1/4, while Jan beans finished 20-1/4 higher to 8.64. In intra-day trade, Nov bean futures traded as high as 8.55 before this afternoon's settle. Despite prospects of large yields and burdensome U.S. supplies, outside news on the trade and political front brought strong short covering into the soybean market. With the potential of Argentina raising its export tax rates to 30% on its beans, this opens the prospects for additional global demand moving to U.S. exporters. In addition, trade talk of China purchasing 10-15 cargos of beans for import, and Argentina following suit purchasing 10-15 cargos of U.S. beans, continues to show how depressed prices can shuffle demand from one location to another, or as end users look to find sources of beans to meet their needs. With bean futures now gaining nearly 40 cents in two days, prices are trading to their highest level in over a month, and the technical picture has improved. Prices closed today above the 10 and 20-day moving averages on the Nov contract for the first time since crossing through those levels on August 20.

WHEAT HIGHLIGHTS: Wheat futures finished with mild gains, but failed to participate in the strength of rallies seen in the other grains in today's trade. Front month Dec Chi was up 1-1/2 cents to 5.24, while Mar futures finished 2-1/4 cents higher to 5.42-1/2. KC Dec contract finished 3/4 cent higher to 5.27, while Mpls spring wheat Dec contract was 1/2 cent higher to 5.88-1/2. Spillover strength from other grains, as well as a softening U.S. dollar, helped provide buyer support in the wheat futures today. Wheat futures are challenging trend line resistance established in early August, and key moving averages have kept today's rally in check. The U.S. dollar index broke through the bottom of this most recent trading range and may be poised to soften further, which will only help U.S. wheat on the global competitor front. Weekly export sales were in line with recent weeks at 17.2 million bushels. In total, though only the second week of the marketing year, outstanding sales down currently 22% of last year's pace and shipments are down 31% from last year. Despite tighter global supplies of potential exportable wheat, wheat futures need to see movement to U.S. shores to help possibly push prices through key resistance levels.

CATTLE HIGHLIGHTS: Cattle futures closed mixed to lower today, putting in outside sessions though not making any breaks lower. The nearby live cattle Oct contract closed 65 cents lower to 112.45, Dec closed 7 cents lower to 117.90, and Feb closed 25 cents lower to 121.60. Sep feeders were up 15 cents to 155.67 and Oct feeders were down 60 cents to 157.27. Export sales data released this morning was slightly negative. A total of 15,900 tons of beef were reported sold last week vs the previous 4-week average of 18,975 tons. Cumulative sales for 2018 are currently at 741,700 tons, 19.4% ahead of last year's pace. Choice beef values fell 1.04 yesterday afternoon to 204.25, but bounced 76 cents higher this morning to 205.01. Feedlots this week are currently asking 114.00 to 115.00, with a few reports of cattle selling from 110.00 to 111.50. Cargill recalled 132,000 pounds of ground beef today due to possible E. coli contamination. This may or may not show up in the markets. All three nearby live cattle contracts put in bearish outside days today, with the Oct price action looking the most negative of the three. Today's price action was most likely due to long speculators exiting before tomorrow afternoon's Cattle on Feed report.

LEAN HOG HIGHLIGHTS: Hog futures put in mixed closes today, near months again rallying at the expense of deferred contracts. Oct hogs closed 1.25 higher to 61.25, Dec closed 37 cents higher to 58.27, and Feb closed 32 cents lower to 65.62. Carcass values closed 82 cents higher yesterday afternoon to 78.39, but were down 40 cents this morning to 77.99. U.S. pork export sales for the week ending September 13 were reported this morning at 22,900 tons vs the previous 4-week average of 23,425 tons. Cumulative sales are running 6.5% out of last year's pace, currently at 976,900 tons. For the second time this week, the Oct contract put in a gap higher session. Dec futures closed just below their 200-day moving average resistance, and Feb futures closed lower but were able to hold onto their 10-day moving average support. Just as momentum is ramping up in the nearby Oct, Dec and Feb may be flattening out.




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