Stewart-Peterson Market Commentary

Closing Commentary - May 20, 2019

Top Farmer Closing Commentary 5-20-19

CORN HIGHLIGHTS: Corn futures pushed higher again today with gains of 4-3/4 to 6-1/4 cents, as Sep lead today's futures rally, closing at 3.96-3/4. Nearby Jul gained 5-3/4, closing at 3.89, its highest close since late Feb. New crop Dec closed 6-1/4 higher at 4.04-1/2 after reaching a high of 4.05-1/2, its highest price since 11/8 when futures hit a high of 4.06-3/4. The post-harvest high from 10/15 is 4.08. This is the sixth consecutive close higher for corn futures, as the market continues to reflect significant and serious planting delays. With a 6-10 day forecast that continues to suggest above normal precipitation, all attention is focused on rainfall totals, as well as futures price. At the current price of new crop corn at 4.04, we are not convinced farmers will (where available on the 25th) plant beyond the preventative plant date. The economics this year are not good, and the prevent plant payout is tempting. If the weather forecast happens to turn better and prices continue to rally, that theory may go out the window as farmers aggressively plant corn acres. Unfortunately, the forecast for many doesn’t offer much opportunity, at least not as of this writing. In other news, export inspections at 32.3 million bushels were below the 44 million needed on a weekly pace but not a friendly figure.

SOYBEAN Highlights: Soybean futures remain somewhat volatile after sharp losses Friday, gaining back 9-1/2 to 10-1/2 cents, with Nov leading today's charge, closing at 8.57-3/4. The 10-day moving average held as support. The 21-day moving average is acting as overhead resistance. Jul beans closed 10 higher to 8.31-3/4. With the national soybean index price near 7.39, we do not expect farmer selling to be strong. Nonetheless, it is a time of year where cash flow requirements and bin space eventually become more important, and farmers will likely have to sell. Our thinking is to be patient at this time, as wet weather this late into the season is not necessarily conducive to bean planting. We do not expect farmers to move, if any acres of beans, given the low price of soybeans. If farmers prevent plant corn and decide to plant beans, that could add acreage, but the numbers don't seem to work for that either. Our bias is to stay patient on cash sales. As far as orders well above the market to sell cash, given the amount of coverage on futures and put options, our bias will be to move out of these short positions at some point and leave the cash orders well above the market. Beans are notorious for making fast and furious moves, sometimes when least expected and sometimes on weather.

WHEAT HIGHLIGHTS: Wheat futures on all three exchanges experienced strong gains of 13 to 15-3/4 cents with Mpls leading today's charge, as Sep closed at 5.52-1/2, its highest close since late Mar. The next point of resistance is the 100-day moving average at 5.61-1/2. From a big picture perspective, the wheat market is gaining traction on concerns that weather has not been ideal for winter wheat, and this will be exhibited in today's crop ratings numbers. Spring wheat planting numbers may be down as well. Short covering and funds moving out of short corn, beans and wheat positions are also noted, as all three commodities continue to move higher.

CATTLE HIGHLIGHTS: Cattle markets closed mixed to mostly lower today, unable to build on Friday's strong finishes. Jun lives were up 7 cents to 111.35, Aug lives were down 40 cents to 108.52, and Oct lives were down 40 cents to 108.50. May feeders were down 37 cents to 134.15, Aug feeders were down 72 cents to 144.77 and Sep feeders were down 82 cents to 145.87. Choice beef closed 75 cents higher on Friday afternoon to 220.31 and was up another 86 cents this morning to 221.17. Friday's private survey of U.S. consumer confidence came in much higher than what most were expecting, posting its highest rating since 2005, a good sign for beef demand. Cash trade last week was down $3 to $5 from the previous week in most areas, as packer margins continue to strengthen. This will keep chain speeds high and production moving at a good clip. Higher than normal beef demand will be needed to keep supplies from inflating. Price action today, while not positive, was not all that bearish. The best traded live cattle contract was within Friday's range for the entire session and held its 10-day moving average support level. Aug feeders stayed within Friday's range as well, tested their 10-day moving average support level and closed back above. Some technical indicators are still giving oversold readings, which may provide some fuel for a bounce if fundamentals can firm up.

LEAN HOG HIGHLIGHTS: Hog markets were mixed with Jun down 62 cents to 91.75, Jul steady at 93.00 and Aug up 50 cents to 94.45. The CME lean hog index was up 38 cents to 84.59, its highest value since Jul of last year. Carcass cutout values were down 86 cents Friday night to 85.27 but were up 3.82 this morning to 89.09. Butts were up 3.42 to 109.05, picnics were up 5.01 to 61.47, ribs were up 7.37 to 153.40 and bellies lead the way higher, up 23.18 to 153.49. The U.S. lifted tariffs on Canadian and Mexican steel and aluminum last week, which should spur Mexico to move lower tariffs on U.S. pork products. Monthly imports of U.S. pork reached 182.4 million pounds last April but were down to just 128.4 million pounds in March of this year. Jun hogs briefly tested their 10, 20 and 50-day moving average support levels but were able to rally back by the close to finish above them. Jul hogs barely tested their 50-day moving average resistance level but couldn't break through. Aug hogs were also caught between their 20 and 50-day moving average levels.