Stewart-Peterson Market Commentary

Closing Commentary - November 12, 2019

Top Farmer Midday Update 11-12-19

CORN

Corn futures are moving higher today, with Dec up 1-3/4 to 3.75. Mar is up 1 to 3.83, and May is up 1/2 cent to 3.89-1/4. Corn markets made their sixth lower close of the past seven sessions yesterday, as prices fall further into oversold levels. Many are expecting U.S. corn acreage next year to increase, which could bring stocks to next year’s balance sheet. In the near term, there is not enough export demand or confirmation of lower yields to provide much stabilization. For the week ending October 31, the U.S. shipped about 276,000 tons of corn, versus 391,000 tons last week and 1.28 million tons a year ago. Cumulative corn shipments are running 6.2 million tons behind last year’s pace. Dec corn futures have held yesterday’s lows so far, though are trading in a quiet, inside session. The range has been less than 4 cents, and momentum is still pointing lower. Speculative funds were thought to have sold about 14,000 contracts of corn yesterday.

SOYBEANS

Soybean futures are choppy this morning, with Nov up 3/4 cent to 9.05-3/4. Jan beans are down 3/4 cent to 9.16-1/4, and Mar beans are down 1 cent to 9.29-1/2. Forecasts for South American growing areas are beginning to improve, and with lingering uncertainty about U.S. / China trade negotiations, buyers are few and far between. The U.S. shipped 1.48 million tons of beans for the week ending October 31, just slightly lower than last week’s total of 1.58 million tons but above last year’s total at 1.25 million tons. Cumulative shipments are running nearly a million tons ahead of last year’s pace. The best traded Jan contract has traded within a range today of just a nickel after an unsuccessful test of resistance at the 200-day moving average level. Soybean futures are oversold, though last week’s neutral to bearish Supply and Demand report was not enough to draw buyer interest. Speculative funds were thought to have sold about 8,000 contracts of beans on Monday.

WHEAT

Wheat markets are higher this morning, with Dec Chi wheat up 6-1/2 to 5.12-1/4. Dec KC is up 8 to 3.40-3/4, and Dec spring wheat is up 2-1/4 to 5.17-1/2. The KC / Chi spread narrowed by 6 cents yesterday, the biggest daily move for this spread since mid August. Short covering out of KC wheat futures is the likely culprit, as harsh early season winter weather could be causing some concerns. Last week’s Supply and Demand report was seen as somewhat positive, thought most were expecting Argentina and Australia production totals to come down in future reports. Dec Chi wheat is trading at the highs of the day currently, pushing through its 10-day moving average resistance level. Dec KC wheat is pushing sharply through its 100-day moving average level for the first time since July. A close above could open up more than 20 cents of upside. Spring wheat futures are consolidating in oversold levels. The U.S. shipped 293,000 tons of wheat for the week ending October 31, versus 558,000 tons the previous week and 341,000 tons the same week last year. Cumulative shipments are running nearly 2 million tons ahead of last year’s pace. Speculative funds were thought to have sold about 4,000 contracts of Chi wheat yesterday.

CATTLE

Cattle markets are mostly lower this morning, with Dec lives down 35 cents to 119.52. Feb lives are down 40 cents to 125.27, and Apr lives are down 10 cents to 126.85. Nov feeders are up 15 cents to 147.72, and Jan feeders are down 22 cents to 146.90. Despite last week’s jump in cash trade, futures are still trading at a significant premium to the cash market, which could encourage feedlots to keep market-ready cattle held back, thereby increasing average weights and short term supply. Placements into October and November are likely to come in well above year-ago levels, but the retail tone is still positive. Technically, futures are still overbought and may be overdue for a correction if fundamentals soften. Dec lives retested their 10-day moving average support level for the third session in a row today and are trading in a quiet, inside session. Jan feeders are currently making a hook reversal after trading at their highest levels for the move so far.

HOGS

Hog markets are higher this morning, with Dec up 1.52 to 64.82. Feb hogs are up 1.15 cents to 74.87, and Apr hogs are up 52 cents to 81.17. Pork markets are beginning to rally, and the cash index has been choppy, which has kept packer margins very strong and the slaughter pace very heavy. This is bearish on face value, thought the steady rise in pork values does seem to indicate that export sales have been active. China’s pig prices are still drifting lower. Dec hogs are retesting their overhead 10-day moving average resistance level today. Feb hogs are trading above their 20-day moving average level for the first time since October 22, and Apr hogs are also above their 20-day moving average for the first time since October 22. The strong technical setup in the deferred contracts seems to align itself with the idea that a deal with China may be a bit farther down the road.




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