Stewart-Peterson Market Commentary

Closing Commentary - January 16, 2019

Top Farmer Closing Commentary 1-16-19

CORN HIGHLIGHTS: Corn futures gained back some of yesterday's losses, as futures closed 2-1/4 to 2-3/4 cents higher with Mar leading today's gains closing at 3.74. Technical damage was done yesterday but today's bounce back might suggest it will be a moot point, particularly in the days ahead, prices can bounce or gravitate more toward the 3.80 mark in Dec. Yesterday's low in Mar corn was 3.71, the lowest price seen since late November. The highest price, however, since late November is 3.87-3/4, so the overall trading range is relatively limited. Stable soybean and wheat prices may have lent some support to corn as did the expectation that farmer selling will slow on a price setback. While the most recent news regarding relations with China seem to indicate not much progress was made this past week, we're not sure if we should believe that or not. The stock market continues to roll higher, and when relations with China were breaking down equities lost ground in a very fast and almost furious fashion. In addition, energy prices continue to show life as crude oil has rebounded near 10.00 off its recent lows. Bottom line, not a lot of reason to be bearish corn.

SOYBEAN HIGHLIGHTS: Soybean futures held steady today finishing unchanged to 1-1/4 cents higher as Mar and May led today's small gains. Today's trading range was tight with most futures less than 10 cents. Futures finished near 3 cents off the low for the session, but disappointingly closer to 5-1/2 or 6 cents off today's high. Technical damage on the charts is minimal. On the one hand, prices did slide through the 21, 40, 50, and 10-day moving averages but did hold the 100 and did hold upward channel support. The more prices trade in a sideways pattern, the likelier it is that moving averages will stack up on each other. While this may or may not have impact, it's the strength of which the markets move through moving averages that probably has more bearing, and after prices slipped through moving averages two and three session ago they did not do so with a speed that has us overly concerned. News is rather sparse. While Brazil does struggle with hot and dry conditions, talk from the Brazilian government that the crop is not as damaged as private estimates suggested, along with talk that the most recent Chinese and U.S. discussions had little new to offer, weighed on prices the last few sessions.

WHEAT HIGHLIGHTS: Prices regained a supportive tone finishing mostly unchanged in KC and with gains of 1 to 3 cents in both Mpls and Chi. Supporting prices are recent words by the Russian Ag Minister, recommending that export is slow sales in the second half of the season, which would keep sales within line of the forecasts of 42 million metric tons. Year-to-date has sales estimated at near 25 million metric tons. As been expected for some time, the market's anticipating that the U.S. will pick up extra sales once Russia does slow down selling wheat into the open market. On the weather front, we would have to suggest that U.S. weather is generally good for wheat production this week as a winter storm system pushes through the central United States.

CATTLE HIGHLIGHTS: Cattle futures ended the day with mixed to higher closes yet again, finding more buyer interest in anticipation of inclement weather in the next week or so. The Feb live cattle contract closed 87 cents higher to 127.82, Apr closed 30 cents higher to 127.72, and Jun closed 45 cents higher to 117.50. Jan feeders were down 97 cents to 143.77 and Mar feeders were down 5 cents to 144.70. Choice beef values closed 19 cents higher yesterday afternoon to 212.21 but were off 5 cents this morning to 212.16. The slipping beef prices have been at least partly due to the current production pace. So far this week, 359,000 head of cattle have been killed versus 357,000 head the same time last week and just 348,000 head were killed for the same week last year. Cash bids were seen in some parts of the country early yesterday morning at $124, steady with last week while today's Online Fed Cattle Exchange saw zero sales with asking prices at $127. Cold and snowy weather for the Plains late this week could stress cattle and slow marketings, hence the futures strength so far this week. Technically, today's price action was impressive with both the Feb and Apr live cattle contracts making new highs once again. Meanwhile, the summer month live cattle futures are struggling to mimic the chart strength of the front months. Both Jun and Aug live cattle traded down to some support levels early in the session but rallied to end the day with moderate gains. Meanwhile, Feb and Apr futures made new high closes once again and remain overbought.

LEAN HOG HIGHLIGHTS: Hog markets took heavy losses again today, with the Feb contract down 2.10 to 60.05, Apr down 1.87 to 65.07, and Jun down 47 cents to 78.17. The CME Lean Hog Index was up 44 cents today to 57.65, its highest value since November 26. Carcass cutout values closed 86 cents lower yesterday afternoon to 70.33 but were back up to 70.53 by mid-session today. While China's trading stock was reported down 8.3% in Dec, the futures market could not seem to find any buyers on that information. This should be especially significant considering this was the third month in a row of a greater than 5% decline in breeding stock, but speculative length appears impatient with the lack of large-scale China pork purchases thus far and money flowing out of the hog markets. The Feb contract closed at its lowest value today since November 9 and Apr made its lowest close today since August 15. The Jun contract closed just a touch below its 200-day moving average support level, its first ever close below that line. Technically, futures prices are oversold, but given the liquidation trend, more downside is not out of the question.




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