Stewart-Peterson Market Commentary

Closing Commentary - May 21, 2019

Stewart-Peterson Closing Commentary 5-21-19

CORN HIGHLIGHTS: Corn futures moved higher again today with gains of 4 to 6 cents, as the market continues to factor in growing concerns that some, if not many acres will not be planted due to a continued wet forecast. Yesterday afternoon, the 6-10 day outlook, which indicated above normal precipitation for the entire Midwest and northern Midwest with below normal temperatures, on top of a planting report that indicated only 49% of the crop planted, helped spur additional gains in the corn market today. There were lots of rumors today about a potential payout of 2.00 in beans and 4 cents in corn from the Trump administration had bean prices reversing down late in the session and pulling on corn. At one point, corn had traded 9 cents higher, with Jul reaching a near term high of 3.99, the highest price it has reached since late December. To say these are uncharted waters might be an understatement. When visiting with several farmers who have yet to even make it to the field, there is a growing pessimism that acres will get planted and that farmers may take prevent plant. As indicated yesterday, however, be careful that prices can move fast enough to encourage producers to plant beyond prevent plant date. Our point is, do not move away from good marketing, and be strategic.

SOYBEAN Highlights: Soybean futures ended the day on a weak note, losing 9-1/4 to 9-3/4 cents as Jul led today's drop, closing at 8.22. New crop Nov closed down 9-1/4 at 8.48-1/2. Jul closed right at the 10-day moving average, a support level, as did November. Today's range was much larger than yesterday, and today's poor finish is a technical reversal. This is not a good sign if you are bullish. The inability to hold gains after pushing through the 21-day moving average suggested that traders were willing to sell the rally and, consequently by day's end, prices reflected a weak close. Yet, there is more to the story. Planting progress is behind schedule, and this is starting to provide underlying support. Yet, talk late in the session of a potential 2.00 payout to soybean producers, as reported by Bloomberg news, had prices on the defensive in a hurry. Bean prices were trading higher through much of the session when this news was released, prices dropped. The obvious implication is that farmers may try to plant aggressively as many bean acres as possible.

WHEAT HIGHLIGHTS: Wheat futures finished relatively quietly in a rather volatile day. Jul Chi wheat closed 1/2 higher at 4.78-3/4 after reaching a high of 4.92-3/4. KC Jul closed 1-1/2 higher at 4.36 after reaching a high of 4.53, Mpls down 1/2 in nearby Jul and down 1/2 in Sep. Sep closed at 5.52. Wheat futures bolted higher in sympathy with sharply higher corn prices in the morning session. However, it appeared that, when buy stops were triggered after pushing through the 100-day moving average, prices moved higher and then ran out of gas. A reversal downward and a close beneath the 100-day moving average suggests that the wheat market could quickly run out of steam. We would not be surprised to see farmer selling pick up after a 70-cent rally in little more than one week. From a technical perspective, the market has a firm footing, and all arrows are pointing higher. Today's close back under the 100-day could start to put doubt in the minds of traders. Crop progress and ratings indicated 54% of the winter wheat crop in the head stage versus a 5-year average of 66%. Concerns of too much moisture and disease issues rising have been supportive for prices.

CATTLE HIGHLIGHTS: Cattle futures closed mostly lower, falling back within the trading ranges that prices occupied for most of last week. Lives closed 50-cents lower to 10.85, Aug lives were down 25 cents to 108.27, and Oct lives were down 20 cents to 108.30. May feeders were up 22 cents to 134.37, Aug feeders were down 1.77 to 143.00 and Sep feeders were down 1.70 to 144.17. Choice beef values closed 1.14 higher yesterday afternoon to 221.45 but were down 43 cents this morning to 221.12. Cash trade today was light, though early week trade is coming in about 1.00 lower than last week. While future beef demand should pick up with help from Japan and possibly China, concerns that weather over the Memorial Day weekend may not be conducive to widespread grilling has kept the markets choppy. Technically, though today's price action was not positive, there was minimal technical damage done in the live markets. The Jun, Aug and Oct contracts were all able to hold their 10-day moving average support levels despite early session tests. Feeder markets were not so composed with both the Aug and Sep contracts falling back below their 10-day moving average support levels after two consecutive closes above.

LEAN HOG HIGHLIGHTS: Hog markets finished with triple digit losses, with Jun down 1.65 to 90.10, Jul down 1.62 to 1.37 and Aug down 1.97 to 92.47. CME lean hog index was steady at 84.59. Carcass cutouts were up 54 cents this morning to 87.07 and finished the day 32 cents higher at 86.85. Global pork prices are beginning to rise once again, reflecting the continuing spread of African swine fever in China, Vietnam and other southeast Asian countries. The China hog situation is likely to cause a spike in global pork export activity, and traders are waiting for Mexico to bring down their 20% tariff on U.S. pork products as well. Positive momentum on the U.S. / China trade front may be grinding to a halt – not a positive sign for U.S. pork exports for later this year. This was likely the source of a good chunk of today's selling. The U.S. and China will be meeting at the G20 summit soon, but again, momentum seems to have slowed. The best traded Jul hog contract held its 10-day moving average support level today but was unable to close above its 20-day. The recent uptrend still appears to be intact, though buying action may be slowing down in the near term.

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