Stewart-Peterson Market Commentary

Closing Commentary - March 21, 2019

Top Farmer Closing Commentary 3-21-19

CORN HIGHLIGHTS: Corn futures moved higher today gaining 2-1/2 to 4-3/4 cents as May led today's gains, closing at 3.76-1/4. All row crops, which trades to negative territory earlier in the session recovered as beans gained near 5 cents and wheat a couple in Chi and KC, along with mixed to higher in Mpls. Weather continues to creep into the picture as the latest 30-day forecast suggests the western Corn Belt stays normal to above normal in precipitation and below normal in temperature. With significant flooding, although it is early in the season, it does suggest that conditions in the western Corn Belt, at least in partial, will be less than ideal. A slow start in the South is also noted. With that being said, we can't put too much stock in that just yet. We can, however, expect that demand will remain solid and that the most recent setback was primarily fund selling. Farmers' selling dried up and end user buying pick up the pace. Export sales at 33.7 mil old crop and 2.4 mil new crop was termed generally neutral. However, end users have been basically reminded time and time again that it is ok to stay hand-and-mouth in their buying, and with prices going nowhere fast this winter, we agree that there wasn't and may not be any urgency. Yet, as spring approaches and uncertainties climb, we'll expect the export market to pick up.

SOYBEAN HIGHLIGHTS: Soybean futures edged 3-3/4 to 4-3/4 cents as July futures led today's gains closing at 9.24, its highest close since March 5. Export sales at 14.7 mil old crop, and -2.4 mil new crop were considered neutral to negative. Continued talk and anticipation that a deal with China may be at hand by the end of the month is providing underlying support seemed to buoy commodities in general, that is row crops. Our bias is that while this news is welcomed, until we actually see fact, the market may have a struggle to sustain rallies. This more so in soybeans as the southern hemisphere equation continues to suggest the crop both in Argentina and Brazil is not only stabilized, but perhaps has rebounded in size from last month. As we look forward to additional opportunities to sell, we'll target May to potentially reach the 9.17 area, where the 100-day moving average rests. New crop Nov, should it recover further, could find a target of near 9.63, the high from February 25. Today's close above the 21-day moving average is a positive technical event. A rebound in the stock market may have been supportive as well.

WHEAT HIGHLIGHTS: Wheat futures edged higher today gaining 1-3/4 cents in Chi, 1 to 3 cents in KC with May leading today's recovery, and mixed in Mpls with may losing 2-3/4, but Sept gaining 1-1/4. Sept continues to try and edge higher, but failed at the 50-day moving average today. The technical activity that we see continues to suggest a bottom may be in place. Cool weather may suggest a less than ideal start to the spring wheat planting season and could provide additional support soon. Another week of poor export sales are at 11 mil bu old crop and 5.1 mil bu new crop would suggest the export market will not reach USDA projections and consequently, a revision would not be surprising on the next USDA report.

CATTLE HIGHLIGHTS: Cattle futures moved moderately higher today again after sputtering mid-session. Apr live cattle closed 32 cents higher to 129.90, Jun lives closed 52 cents higher to 123.90, and Aug lives closed 65 cents higher to 119.97. Mar feeders were up 52 cents to 142.77, Apr feeders were up 60 cents to 148.92, and May feeders were up 1.87 to 154.00. Choice beef values closed 66 cents lower yesterday afternoon to 228.67, but were up 18 cents this morning to 228.85. Cash trade for this week has still been quiet, with the only bids currently published at 204.00. U.S. beef export sales for the week ending March 14 reported this morning at 18,700 mt vs. the previous 4-week average of 36,075 mt. Cumulative sales for this year are down 3.1% from last year's pace, currently at 288,700 tons. Cattle in the Plains continue to suffer due to excess moisture, flooding and low temperature. Weight will be very difficult to keep on, which should keep production in check. Logistical issues with getting cattle out of feedlots is also restraining production. Death loss is due to flooding has been the main supporter for the feeder markets. The Apr live cattle contract matched its contract highs first made on March 1. Today's close was the third highest close over the contract life. Jun futures made new highs and a new high close, as well as Aug lives. Apr feeders rallied sharply higher early in the session, reaching as high as 150.00, but ultimately closed over 1.00 lower back within in their Bolinger band range. May feeders made their highest close since October 3.

LEAN HOG HIGHLIGHTS: Hog markets made their second session in a row of limit higher closes today, with Apr up 4.50 to 78.32, Jun up 4.50 to 94.75, and Jul up 4.50 to 97.57. The CME index is up 1.00 to 57.54, its highest value since January 31. This is the first time the index has traded above the 100-day moving average since mid-October. Carcass cutout values were down 9 cents yesterday afternoon to 74.05, but were up 2.33 this morning to 76.38. Loins were up 4.98 to 70.44, buts up 2.13 to 76.90, hams up 1.19 to 65.62, and bellies were up 3.43 to 138.34. Ribs were the only premium cut lower, down just 37 cents to 119.72. U.S. pork export sales were reported this morning at 29,300 tons vs. the previous 4-week average of 56,625 tons. Cumulative sales for 2019 are up 5.4% from last year's pace, currently at 468,500 tons. Mexico and Chine bought a combined 18, 500 tons despite heavy tariffs. With today's expanded limit higher closes, limits tomorrow will again be at 4.50 per contract. Front month hogs are holding an all-time record premium to the cash index, that does not mean we are necessarily anticipating a pullback. Volatility will remain extremely high due to African swine fever spreading in China and Vietnam.

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