Stewart-Peterson Market Commentary

Closing Commentary - July 22, 2019

Top Farmer Closing Commentary 7-22-19

CORN HIGHLIGHTS: Corn futures had a rough Monday closing with losses of 7-1/2 to 9 cents as Dec led today's drop, closing at 4.26-1/4, its lowest close since July 2. Today's decisive close under the 50-day moving average does not bode well technically for the market and a potential retest of the low from July 2, which occurred at 4.20-1/2, is likely. The market did not fill a gap on July 2 that was left from May 24 at 4.20. Improving weather conditions is allowing the crop to gain speed as far as picking up growth. That' s not a surprise as mid-summer heat was welcomed. Recent rains were also viewed as beneficial and now a cooldown in temperatures should allow crop that needs to pollinate this week experience a good stretch of weather. Additionally, the export market remains slow and added all together and you get long liquidation in futures. The bigger picture perspective continues to have what we would term extreme uncertainty as far as actual acres and what ending yield will look like. Export inspections at 17.2 mil were viewed as a disappointment.

SOYBEAN HIGHLIGHTS: After a very strong looking Friday, prices retreated today with futures losing anywhere from 10-1/2 to 13-1/4 cents. Better weather, a poor technical day in corn and wheat, and a slightly firmer dollar all weighed on futures today as prices worked lower throughout the session finishing near the low of the day. The good news is beans continue to hold the 9.00 mark and today's range was inside of Friday's, so it is just termed a down day. If we continue to see consolidation or wedge pattern, that could quickly push beans to the topside. On the other hand, a head and shoulders formation suggests downside. The bottom line is lots of technical signals that suggest a break one way or the other. Make sure and stay current with recommendations.

WHEAT HIGHLIGHTS: Wheat futures had a tough session with sharp losses today in both KC and Chi with Mpls finishing with moderate losses. Sep Mpls lost 8 cents closing at 5.21-1/4, while Sep KC lost 10-3/4, and Sep Chi down 15-1/4 at 4.87-1/4. Export inspections were again slow at 15.9 mil bu, below the 18.3 mil needed on a weekly basis to reach the USDA projection of 950 mil. Harvest pressure and dryer weather for the week ahead should allow for crop maturity and additional harvest in the week after. This will likely keep new crop prices struggling. Sep Chi reached its low today of 4.87, a level that the market has not traded to since May 24. The 100-day moving average held as support. A technical head and shoulders formation continues to point toward a move down to 4.50 or less.

CATTLE HIGHLIGHTS: Cattle markets closed higher today with strengthening fundamentals keeping buyers active. Aug lives were up 85 cents to 108.45, Oct lives were up 37 cents to 108.87, and Dec lives were up 62 cents to 113.80. Aug feeders were up 2.20 to 142.17, and Sep feeders were up 2.62 to 142.42. Choice beef values were up 8 cents at Friday's close to 213.42, but were down 23 cents this morning to 213.19. Friday's Cattle on Feed report was considered neutral with marketings, placements, and on feed coming in nearby identical with the market's expectations. This didn't spur enormous amounts of new buying today, but it did confirm expectations for tighter market ready supply for later this year. On today's USDA Cold Storage report, total pounds of beef in freezers were down 3% from last month and down 12% from last year. This is supportive, given the strength of the U.S. economy, we should see beef demand pick up. Today was relatively uneventful in the live cattle markets, with the best traded Oct contract unable to close above its nearby resistance at the 10-day moving average. Feeder contracts broke back above their 10-day moving average resistance level, and the best traded Aug contract made its highest close since July 11.

LEAN HOG HIGHLIGHTS: Hog markets had a choppy and two sided session as overbought technicals clashed with strengthening fundamentals. Aug hogs closed 65 cents lower to 83.22, Oct hogs were up 27 cents to 79.20, and Dec hogs were up 27 cents to 77.02. The CME lean hog index was up 88 cents today to 72.40. Carcass cutout values closed 2.40 higher on Friday to 77.76. Carcass values did reach 83.23 this morning, but ended up closing 2.08 higher for the day to 80.61. Bellies were up over 18.00 today, trading at 139.04. Frozen pork supplies were down 1% from last month, but up 11% from last year on this afternoon's USDA Cold Storage report. Pork belly sticks were down 12% from last month, but up 6% from last year. This is neutral to negative, but shouldn't be a big surprise given the recent chain speed. China's spot pig prices were up slightly overnight and are now up 9.5% for the month hand up 41.8% year to date. The best traded Oct lean hog contract traded at its highest level today since June 6. Technical indicators are still giving overbought readings in the Aug contract despite a negative close today.

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