Stewart-Peterson Market Commentary

Closing Commentary - December 09, 2019

Top Farmer Closing Commentary 12-9-19

CORN HIGHLIGHTS: Corn futures picked up where they left off last week and that is more sideways to lower with losses of 3/4 to 1-1/4 today as May led today’s drop closing at 3.81-1/4. Nearby Dec closed 3/4 lower at 3.65-3/4, and new crop Dec down 1-1/4 at 3.89. Consolidation with a slightly bearish slant is the theme of the corn market the past month and with tomorrow’s monthly supply and demand due out, prices failed to find short covering despite double digit gains for soybeans most of the session. Wheat, however, did finish with losses and that too seems to be weighing on corn prices as KC, a competitor in the feed grains, lost a nickel and closed at its lowest level in three weeks. Export inspections were 18.9 mil bu, confirming slow export sales year to date. The market needs to see over 41 mil bu per week to meet teh USDA estimate of 1.855 bil bu. While this is not impossible, each week that goes by makes it a little more difficult. Year to date inspections are at 257 mil, which is down over 55% from last year. No matter how you slice it, the export sector is not holding its own weight and were’ concerned this will show up on tomorrow’s Supply and Demand report.

SOYBEAN HIGHLIGHTS: Soybean futures firmed again today with solid gains on futures of 6-1/2 in Nov 2020 to 8-1/2 cents on Mar, closing at 9.11-3/4. On a somewhat disappointing note, prices didn’t close near the high of the day, but more like 7 or 8 cents from the high. The 21-day moving average held Mar beans in check despite prices pushing through this level earlier in the day. It is likely that buy stops were uncovered once futures did move through this key resistance level. We were somewhat disappointed that the bean market didn’t have more bounce to it considering there were two major fundamental events that seemed to have supportive factors. A dryer forecast for Argentina continues to suggest major bean growing areas in that region are headed toward dryer and warmer conditions. Additionally, China on Friday is waiving tariffs on U.S. soybeans and pork and both the U.S. and China negotiated a trade deal. This was said to be a positive event. Beans did respond earlier in the session, but the take off in upward prices was rather slow. Export inspections were friendly at 48.8 mil bu.

WHEAT HIGHLIGHTS: Wheat futures finished mixed on all three exchanges as soft red winter finished down 1/2 to 1-3/4, KC wheat down 3-1/2 to 5-1/2 cents with May leading today’s drop, and Mpls steady to 1 higher. Mar KC wheat closed at its lowest level since the third week of November. We can’t help bt be disappointed in the way KC wheat is behaving, but it looks very much like the corn market, more sideways to lower for both. Ample feed supplies of both in the very near term appear to be weighing on prices. From a bigger picture perspective, we continue to see private firms near both Australia and what will likely be the USDA projection tomorrow of declining wheat supplies because of drought. Yet, world inventories will probably not experience much, if any, change and so all of this weather development the last two months is very important to the Australian producer ample world inventory suggests its not necessarily a big deal.

CATTLE HIGHLIGHTS: Cattle markets make mixed to mostly lower closes today with Dec lives down 2 cents to 120.17, Feb lives were down 22 cents to 124.75, and Apr lives were up 5 cents to 125.40. jan feeders were down 2 cents to 141.52, and Mar feeders were up 60 cents to 142.27. Choice beef values closed 1.04 lower on Friday afternoon to 224.56. This is the lowest choice value since October 23rd and was a 3.3% loss on the week. Choice cuts were down another 1.55 this morning to 223.01. Cash cattle traded in KS last week at 118.00 to 119.50, with an average price of 119.00. This was steady to very slightly higher from the previous week trade at 117.00 to 119.00. The five area average price was 118.79 vs 118.51 the previous week. The cash markets resiliance in the phase of lower trending beef values is impressive, though like not sustainable. If beef values cannot firm up this week, it seems likely that cash cattle will begin to turn lower. Last week was very dry in the Plains, and forecasts are showing more of the same this week, which means weight gain will be significant. The best traded Feb live cattle contract briefly traded above its 10 and 20-day moving average resistance levels this morning, but sold off and closed below then. Feb lives have not closed above those moving average lines since last Tuesday and have put int three unsuccessful tests in a row since then. Apr lives also tested their 10 and 20-day moving average resistance levels and could not close above for the fourth session in a row. Jan feeders found selling action at their resistance levels at the 50 and 200-day moving average.

LEAN HOG HIGHLIGHTS: Hog markets put in moderate losses to start off the week with Dec down 1.12 to 60.00, Feb hogs were down 85 cents to 66.70, and Apr hogs were down 72 cents to 72.97. The CME lean hog index was up 15 cents to 58.49, the cash index has not made four consecutive positive closes since late October. Carcass cutout values closed 72 cents higher on Friday to 82.08, and were up another 93 cents this morning to 83.01. Hog inventories in China in Nov were up 2% from Oct, the first month to month increase in hogs in a year. Chinese breeding sows grew 4% Nov from Oct, the second straight month the number has risen. Despite the increases in hog supply, pork supply is still tight and won’t begin to pick up for about six months. Dec hogs made their lowest close today since August 23rd. Today’s session also created gaps on the chart as Dec drifted towards the low end of its recent range. The best traded Feb contract recovered into the close, finishing in the upper 1/3 of the day’s range. Apr hogs also had a somewhat impressive close, rallying to stay within the upper 1/3 of the day’s range. Technically, hogs still look weak though the late buyer interest still shows that traders do not want to push hogs out of recent trading ranges, at least at this point.

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