Stewart-Peterson Market Commentary

Closing Commentary - January 22, 2019

Top Farmer Closing Commentary 1-22-19

CORN HIGHLIGHTS: Corn futures saw selling pressure this afternoon, as contracts finished 2-3 cents lower. Front month Mar corn was down 2-3/4 to 3.79, while May was down 2-3/4 cents to 3.87-1/4. As the U.S. government shutdown stays in effect, grain markets are still missing overall news and information. One news item that has been coming through is weekly export inspections, and last week, the USDA stated that 43.6 million bushels of corn were inspected for export. This keeps total inspections up 61% on a year over year base and supportive in the corn market. Corn futures failed to find much traction, as weakness in outside markets as trade chances between China and the U.S. continued and intensified in today's trade. It was announced earlier today that the U.S. cancelled preparatory meetings for next week, due to outside disagreements over intellectual property. This pushed outside markets as well as grain markets lower, through the middle portion of today's trading session. Anticipation that China will step into the corn market and overall tight fundamentals are supportive for corn prices. Overall, the market is sideways to range-bound.

SOYBEAN HIGHLIGHTS: Soybean futures finished 4-7 cents lower. Front month Mar beans finished 7-1/2 lower to 9.09-1/4. May beans were 7-1/4 lower to 9.22-3/4. Soybean futures were relatively unchanged early in the session but saw selling pressure on the lack of progress between the U.S. and China and a cancellation of meetings based off of intellectual property issues. Bean futures pushed to an intraday low of 8.99-1/2 on the Mar contract, down about 14 cents. Prices rallied toward the end of the day, finishing nearly 10 cents off of today's lows. Weekly export inspections were relatively strong at 39.9 million bushels of soybeans inspected for export last week, and this continues the bearish pace of total inspections running 40% below last year's levels. With the USDA government shutdown still in effect, overall sales of beans have been missing from the market, and the prospects that China has been buying U.S. beans for the past month is an unknown. Being halfway through the 90-day trade truce, prospects for U.S. soybean demand will be riding on the talks starting again on 1/30.

WHEAT HIGHLIGHTS: Wheat futures were the strength of the grain market today, as Chi contracts finished 3-4 cents higher. Front month Mar was up 3-1/2 to 5.21-1/4, while the May contract finished 3-1/2 cents higher to 5.27. Strength was also seen in KC HRW wheat with the Mar contract up 3-3/4 cents to 5.09-3/4. Buying strength slipped out of the Mpls spring wheat contract, down 2-1/4 cents in Mar to 5.72. The wheat market has seen strength on unconfirmed reports that Russia may soon be limiting exports and the possibility that Chinese officials are considering purchasing up to 7 million tons, or 257 million bushels of U.S. wheat, depending on the trade talks. Wheat futures traded to an intraday high of 5.26 on the Mar Chi contract before concerns on U.S. and China trade issues added some selling pressure. In a market that is buying headline risk, rumors are rumors, any confirmation of potential sales is still lacking. USDA weekly export inspections saw a slight improvement of 19 million bushels of inspections for the last week. This still keeps total inspections down 10% from year ago levels and behind the USDA pace to meet their projected goals.

CATTLE HIGHLIGHTS: Cattle futures finished with triple digit losses, falling off of the recent highs and possibly rolling the trend lower. The nearby Feb live cattle contract closed 1.40 lower to 145.12, Apr closed 1.30 lower to 126.07 and Jun closed 1.02 lower to 116.42. Jan feeders were down 40 cents to 141.05, Mar feeders were down 1.32 to 141.50 and Apr feeders were down 1.45 to 142.95. Choice beef values closed 2.11 higher Friday afternoon to 215.26. This was a solid jump on cold weather concerns for the Plains later this week. Choice beef values were up another 59 cents this morning to 215.85. Later this week, cold weather on the East Coast could stifle some beef demand, and others are predicting less stress in the Plains than initially expected due to forecasts for cold and dry weather. Technically, the rally early last week left live cattle futures overbought, and with open interest up over 17% over the last 6 weeks, it is likely that fund traders are very heavily long. If fundamentals cannot hold it together this week, some more downside is likely on long liquidation. The nearby Feb live cattle contract gapped lower today, closing below its 10-day moving average for the first time since 1/4. Apr futures were able to hold onto their 20-day moving average support level today. The best traded Mar feeder cattle contract made its lowest close since 1/4.

LEAN HOG HIGHLIGHTS: Hog markets finished mixed in stabilizing action after strength on Friday. The nearby Feb contract closed 25 cents higher to 61.47, Apr was down 17 cents to 66.10 and Jun hogs were up 30 cents to 70.67. The CME lean hog index was down 11 cents to 58.07. This was the cash index's first move lower since 1/3. Carcass cutout values were up 86 cents on Friday to 70.83 and were up another 74 cents today to 71.57. Pork production has been running 7.3% ahead of last year's pace, but weather across Iowa this week looks likely to slow marketings and may support the cash market. China is still battling the African swine fever outbreak. China pork values fell last week due to liquidation of breeding stock, which could slow China pork production in the coming months. Technically, the Apr and Jun futures contracts had inside trading sessions. The Jun contract closed slightly below its 10-dsay moving average level, while the Feb and Apr contracts tested and failed to close above nearby resistance levels.




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