Stewart-Peterson Market Commentary

Closing Commentary - September 18, 2019

Top Farmer Closing Commentary 9-18-19

CORN HIGHLIGHTS: Corn futures moved higher today gaining 1/2 to 3-1/4 cents with Dec leading today’s gains, closin at 3.71-1/4. Today was a somewhat encouraging day considering prices had a poor finish yesterday and managed to hold after trading lower and then rebounding. Strength in wheat provided underlying support, but other than that news was rather lacking. Weather forecasts continue to suggest above normal temperatures in the foreseeable futurer with the latest 6 to 10 day forecast through the 28th showing all of the Midwest above normal temperatures. In other words, no immediate threat of frost and consequently, the crop continues to mature. We understand that many producers will need well into the first, if not second or even third week of October to avoid significant frost damage. This may be pushing the odds, but if the current forecast stays as is, less threat of major bushel loss is on the horizon. That being said, corn prices continue to consolidate.

SOYBEAN HIGHLIGHTS: Bean futures weakened today with losses of 3-3/4 to 5 cents as prices traded on the south side of steady for most of the session. The 100-day moving average held as support. This is the second consecutive down day for beans, which isn’t necessarily a surprise considering the strong upturn of over 50 cents last week. The dollar firmed slightly today and that was viewed as negative, as was a lack of new positive news. As we look ahead, if weather continues on the same path as it is, above normal temperatures, less and less concern of freeze damage could weigh on futures. Yet, we believe that yield is overestimated by the USDA and there is a good chance that there could be 1 to 3 mil acres of beans that just don’t make it regardless. That being said, carryout could move under 500 mil bu and if any frost has impact, down to 350 mil. A lack of trade deal with China continues to hang over the market like a wet rag despite recent small purchases by China.

WHEAT HIGHLIGHTS: Wheat futures finished firmer on all three exchanges with solid gains of 5 to 7-1/2 cents. Dec Chi closed 5-1/4 higher at 4.89-1/2, Dec KC up 7-1/2 at 4.09-3/4, and Mpls Dec up 6-3/4 at 5.13-1/4. Dec Chi closed above the 50-day moving average today for the first time since July 12. Concerns that dryer weather could limit Australian exports, as well as technical strength, is providing underlying support. The 40-day moving average held as support today, as the market viewed this as a buy area and it didn’t take long for prices to recover. It’s hard for us to warm up to the idea that wheat prices have a lot of upside potential. We understand spring wheat could find support on a lack of good harvest weather for the remainder of the crop it needs to get off the field sooner than later.

CATTLE HIGHLIGHTS: Cattle markets posted a solid session today of impressive follow through with Oct lives up 1.02 to 100.37, Dec lives were up 85 cents to 106.15, and Feb lives were up 60 cents to 112.37. Sep feeders were up 70 cents to 139.87, Oct feeders were up 1.10 to 138.40, and Nov feeders were up 1.25 to 136.30. Choice beef values were down 85 cents at yesterday’s close to 219.77, and were down another 1.21 this morning to 218.56. Extremely strong packer margins have kept the feedlot marketings very current. Steer weights are below last year and below the 5-year average keeping beef production at bay despite the fast slaughter pace. Early week cash trade has been seen steady to 1.00 higher than last week already. Market are also finding support from what looks to be solid ground work for a trade deal with Japan that shoudl help increase beef exports. Oct live cattle made their highest close today since August 26th and their highest trades since August 27th. Momentum indicators are pointing higher, though futures may be moving closer to overbought territory. If Oct lives can push through 101.67, there is still a gap to fill at 103.75, and another at 106.42. Oct feeders back tested their 50-day moving average support level today and closed higher. Oct feeders are overbought as well with next resistance at the 100-day moving average level at 139.15.

LEAN HOG HIGHLIGHTS: Hog markets were able to close higher today, consolidating recent choppy trading ranges. Oct hogs were up 82 cents to 62.92, Dec hogs were up 12 cents to 67.80, and Feb hogs were up 1.27 to 74.82. The CME lean hog index was down 99 cents to 57.49, and China’s spot pig price was up .11% overnight. This leaves China’s spot pig price up 109.5% year to date. Carcass cutout values were down 45 cents at yesterday’s close to 68.21 and were down another 74 cents this morning to 67.47. The second case of ASF was confirmed in South Korea overnight, which again highlights how serious the situation is in eastern Asia. Despite the prospects of U.S. pork to China, front month hogs are relatively cheap due to the sliding cash prices. Oct will not move too far away from the index and is already trading at a wider than normal premium to the index. The best traded Dec lean hog contract traded as low today as 66.75, below its nearby support level at 67.30. Prices rallied back up towards the end of the day and were able to put in a fourth consecutive close above the 50-day moving average level for the first time since late July.

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