Stewart-Peterson Market Commentary

Closing Commentary - November 14, 2018

Top Farmer Closing Commentary 11-14-18

CORN HIGHLIGHTS: Corn futures saw a quiet trading session today as prices finished mixed. Front month Dec corn was a 1/2 cent higher to 3.67, while Mar gained a 1/4 cent to 3.78. Weakness was seen in deferred contracts as prices were 3/4 to 1 cent lower. It was a very quiet trading day today in corn futures as prices had a 2-3/4 cent trading range. Overall, news stayed relatively quiet in today's trade as prices have stayed in consolidation mode and continued to grind toward the Thanksgiving holiday. The USDA did state corn harvest at 84% as of Sunday, 3% below the 5-year average. While the majority of the Corn Belt has moved through harvest, key states such as IA and NE are lagging in their pace at 83% and 77% finished, respectively. In the final stages of corn harvest, the market will be focused toward the demand side of the equation which has stayed relatively strong for U.S. corn this year. The USDA announced a flash sale of 8.35 million bushels of corn sold to Mexico for the 2018/19 crop year. Overall, corn sale announcements have decreased in recent weeks, bringing some concerns regarding the longer term demand picture. At this stage, corn futures are acting as a follower leaning on strength or weakness seen in other grain markets.

SOYBEAN HIGHLIGHTS: Soybean futures were the strength of the grain markets today, as contracts finished approximately 5 cents higher. Nov beans finished their trading life today as the contract expired 3-1/4 cents higher to 8.70-1/4. New lead month Jan was up 5-1/4 cents to 8.83. Like corn, today was a low volume and narrow trading range for soybeans which recovered off of yesterday's losses. Strength in soybean oil and meal prices helped provide some spillover support in the beans, but prices are staying in consolidation mode with Jan holding the 8.80 area as support. The USDA said soybeans are approximately 88% harvested, down from the 5-year average of 93%. Weather continues to be burdensome in those areas looking to wrap up harvest, and with the USDA making adjustments on yield in the last report, late harvested beans will likely help support that yield going higher as we move into the January numbers. With harvest getting close to wrapping up, focus will stay strictly on the demand side of the equation as the supply pile is known. The USDA did announce a sale of 5.4 million bushels of soybeans to unknown destinations for the 2018/19 crop year. That was the second sale announced this week, but sales, as well as shipments, are still running well behind last year's pace as overall U.S. soybean demand is lacking historical levels.

WHEAT HIGHLIGHTS: Wheat futures were the weakness of the grain markets today as Chi wheat contracts posted another 4 to 5 cent loss. Front month Dec wheat was down 4-3/4 cents to 5.03, while Mar was down 5-3/4 cents to 5.12. Weakness was seen across all wheat species as KC hard red winter wheat was down 5-1/2 cents with the Dec contract settling at 4.81, a new contract low. Mpls spring wheat was down 2-1/4 cents in the Dec contract to 5.76. Despite the USDA numbers showing potential concerns and likely loss of U.S. winter wheat acres due to weather conditions, wheat futures failed to find any traction in today's trade. The USDA stated 89% of winter wheat was planted, down from the 5-year average of 94% for this time window. With 77% of this year's winter wheat crop emerged, good to excellent rating was at 54%. The question is, with wet weather and difficult planting conditions across that region, it is very unclear how many potential U.S. acres are out there. Heavy rains this fall, and a quick turn to cold temperatures may have limited overall planting schedules. Wheat futures may have seen some support underneath the market with wet weather being forecasted in Argentina and possible flooding, which may damage the overall wheat quality. At this stage, wheat futures continue to probe the bottom of the trading range, and KC wheat is pushing to new contract lows as the market is still looking for a shift of demand to U.S. exporters.

CATTLE HIGHLIGHTS: Cattle futures closed mostly lower this morning in a choppy and somewhat uneventful session. The Dec live cattle contract closed 77 cents lower to 114.60, Feb closed 15 cents lower to 118.60, and Apr closed a nickel lower to 120.57. Nov and Jan feeders both ended the day steady, at 148.97 and 146.97 respectively. Mar feeders were down 32 cents to 143.80. Choice values closed 1.47 lower yesterday to 214.08, their lowest value since October 29. Choice beef was down another 48 cents at midday to 213.60. Today's Online Fed Cattle Exchange had zero head sold of 620 offered. With a turn lower in the stock market and heavy recent production expected to overwhelm short term demand, futures ended up drifting lower off of the highs of the day. Technically, the Dec contract opened above its 100-day moving average support, traded up to its 10-day moving average resistance, and sold off from there. The Feb live cattle contract tested moving average but was unable to close above it. Today's technical price action was especially disappointing considering yesterday's bullish key reversals.

LEAN HOG HIGHLIGHTS: Hog futures ended the day with mixed results, after very quiet trade today. The nearby Dec contract closed 30 cents lower to 57.00, Feb closed 17 cents higher to 62.35, and Apr closed 2 cents higher to 67.75. The CME Lean Hog Index was down 67 cents to 61.20. Carcass cutout values made their lowest close yesterday since September 11, down 14 cents to 70.69. Cutout values were down another 1.00 this morning to 69.69. Loins were down 2.99 to 64.30 and Picnics were down 1.61 to 51.54. The slide in pork values is disappointing considering we are in a time when pork values should be rising. Heavy production is likely to blame, somewhat overwhelming the increase in demand. Technically, the Dec contract made a very disappointing session today. Prices initially surged higher, trading as high as 58.20, but ultimately fell back to close below the 200-day moving average level. The Feb and Apr contracts made slightly higher closes, but very limited progress higher. All that said, some positive fundamentals have been building recently. Open interest has been building along with fund length in recent Commitment of Traders reports. This is suggesting that funds are building a large net long position in deferred contracts in case of further AFS troubles.

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